Gold fell to a three-week low on Tuesday ahead of the Federal Reserve meeting. Traders were also cautious buying gold ahead of the jobs report set to be released on Friday.U.S. lawmakers agreed to a spending package that helped avert a government shutdown. Gold closed lower by 0.05% to $1,255.70 per ounce.

Fed Meeting

Gold traded lower ahead of the two-day Federal Reserve meeting. That is because traders are looking to see if the Fed will give hints about rate hikes or shrinking of the balance sheet. If the Fed decides that it wants to raise rates, that will cause the dollar to spike higher.

With gold being denominated in terms ofthe U.S. dollar, it makes the commodity that much more expensive to buy in other forms of currencies. The Fed raised interest rates this past March. It brought the short-term loan rates to between 0.75% to 1.00%.

The consensus is that the Fed might not hike rates at the Federal Reserve meeting, which concludes on Wednesday at 2 p.m. EST. Still, many analysts see a 50% chance that the Fed might hike rates anyways. In light of this, gold traders are being cautious ahead of this meeting. That is likely the reason why gold traded slightly lower.

Jobs Report

Another important factor relating to the gold trade is the April jobs report to be revealed on Friday. It just seems that traders don’t want to buy gold until the next jobs number is known. That is because a good jobs report would indicate that the U.S. economy remains strong. With that in mind, risk would be greatly reduced.

Gold typically tends to shine in light of increased risk in the market. When there is a risk of the U.S. economy performing poorly, that is when traders tend to flock to gold. It is expected that traders would be cautious.

After all, there were only 98,000 jobs added in March. That was a very bad report. Especially, considering the fact that analysts were expecting the U.S. economy to add at least 178,000 jobs for that month. The next forecast is for the U.S. to add 200,000 jobs in April. That data will be revealed this Friday, and that will make it easier to trade gold.

Trading Gold

Gold has fallen at least 3% since its April high. Currently, gold is trading just above its 200-day moving average of $1,252 an ounce. This is a key technical level to watch. A drop below that level would unleash a host of selling which would cause it to dip further.

Another level to watch would be to see if gold can trade above its 400-day moving average of $1,224. There is another technical level to watch, and that would be the resistance level. The first resistance level would be the $1,260 level. If and only if that level is breached will the next resistance level come into play.

The second resistance level would be at $1,272.40. That is significant because it is a weekly high. The way technicals will play out all boils down to the next few catalysts this week.

What Binary Options Traders Should Watch For

There are a few things that traders should watch.

The first of which is the conclusion of the two-day Fed meeting. The Fed will pretty much set the tone for the gold trade. A signal that the Fed will hike rates will likely yield a drop off in gold.

The second item would be the upcoming jobs report. With a stronger than expected jobs report released on Friday, gold will likely trade lower. That is because the risk factor will be removed from the equation.

The final item that traders should keep an eye on would be the support and resistance levels of gold. The support level of $1,252 must hold above for those with call options. On the other hand, the trading of put options could be considered if Gold is unable to breach the first resistance of $1,260.