Key Points:
- Last week’s bullishness attributable to FBI announcement.
- Countervailing technicals should keep the metal neutral moving forward.
- FOMC meeting should be watched closely.
Gold moved modestly higher last week with the majority of its gains accruing during the Tuesday and Friday sessions. Of these two sessions, Friday proved to be the real saving grace for the Gold bulls as news broke that the FBI would be reopening its investigation into the Hilary Clinton email scandal, sending market uncertainty surging. As for this coming week, the Fed’s decision on interest rates will be the news to watch.
The metal was lacking a strong bias throughout most of last week, oscillating in line with the somewhat mixed US data. However, gold did eventually close higher as news broke late on Friday that the FBI would be reopening its investigation into the Clinton email scandal. The ensuing surge in market uncertainty came as a boon to gold which promptly shrugged off the depressing effects of the stronger US Advance GDP result of 2.9% q/q.
Going forward however, focus will shift back onto more economic matters as the US Fed will be convening to make a decision on interest rates once gain. Whilst currently predicted to hold rates at 0.50%, the threat of near-term rate hikes looms over the gold market and this could result in some pre-emptive pricing-in during the lead up to the announcement. Additionally, the ADP Non-Farm Employment Change data is due out prior to the FFR decision, so keep an eye out for any surprises in the figure.
From a technical perspective, gold retains its long-term bullish bias but recent EMA activity could cap further gains over the next few days. Presently, the 12, 20, and 100 day EMA’s remain in a highly bearish configuration and the 100 day average is also positioned to supply dynamic resistance. However, the metal is also being propped up by the incline of the long-term trend line which will likely prevent it from slipping far below the 1261.27 price. Furthermore, RSI is levelling off now which hints that the pair is likely to be flat moving forward.