Gold Price Remains Capped By 50-Day SMA Ahead Of Fed Rate Decision


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Image of gold price daily chart

Source: Trading View

  • The price of gold pushed to fresh yearly highs throughout the first half of 2020, with the bullish price action also taking shape in August as the precious metal tagged a new record high ($2075).
  • However, the bullish behavior failed to materialize in September as the price of gold traded below the 50-Day SMA ($1872) for the first time since June, with developments in the Relative Strength Index (RSI) negating the wedge/triangle formation established in August as the oscillator slipped to its lowest level since March.
  • The correction from the record high ($2075) now indicates a potential shift in market behavior rather than an exhaustion in the bullish trend as the price of gold trades at its lowest level since July, with the RSI highlighting a similar dynamic as it dips into oversold territory for the first time since 2018.
  • However, the price of gold staged a V-shape recovery ahead of the July low ($1758) amid the failed attempt to test the $1754 (261.8% expansion) to $1762 (78.6% expansion) region, with the RSI reflecting a textbook buy signal as the indicator quickly crosses back above 30 and recovered from oversold territory.
  • The opening range for December raised the scope for higher gold prices as the precious metal extended the series of higher highs and lows from the start of the month, with the break/close above the former support zone around $1847 (100% expansion) to $1857 (61.8% expansion) bringing the Fibonacci overlap around $1907 (78.6% expansion) to $1920 (161.8% expansion) back on the radar.
  • The rebound from the November low ($1765) appears to be making another attempt to test the 50-Day SMA ($1872), but lack of momentum to hold above the Fibonacci overlap around $1847 (100% expansion) to $1857 (61.8% expansion) has pushed the price of gold back towards the $1816 (61.8% expansion) to $1822 (50% expansion) area, with the next downside region of interest coming in around $1786 (38.2% expansion).
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