Gold Weakens Sharply Ahead of U.S. FOMC Funds Rate Decision, $15+ Volatility Likely; March 17, 2021

U.S. FOMC Meet & Press Conference

Most eagerly awaited event is here and that is U.S. FOMC Interest Rate Decision followed by Press Conference. It’s the primary tool the FOMC uses to communicate with investors about monetary policy. It contains the outcome of their vote on interest rates and other policy measures, along with commentary about the economic conditions that influenced their votes. Most importantly, it discusses the economic outlook and offers clues on the outcome of future votes.

Points to keep in mind during FOMC Meet:

Today will be the first FOMC meet after Biden’s biggest relief package got approval in U.S. Senate. Fed Chair Powell is not at all worried about rising yield but the concern comes till when U.S. Policy Makers will keep calm if yields continue to rise sharply? Through the past comments from the Fed Chair Powell, one can notice that he has shifted his focus from targeted inflation to rising yields. All in turn signals the positive indication for the U.S. dollar only. On the other hand, what will be the revised GDP and inflation target for the U.S.? Does Powell give any hint on Interest rate hike? Lastly, what type of steps will be taken to boost the vaccination procedures? Any clear comments to get the U.S. economy on track will be taken as hawkish sign.

Let’s see how Gold has reacted during the previous data release:

Jan 27:

Dec 16:

Technical View:

XAU/USD (Gold): Gold spiked down sharply ahead of U.S. FOMC Interest Rate Decision and made new low at $1,727 mark. Here a day chart with triple EMA is bearish for the long run while H1 chart confirms slightly up trend for the short run. A sustained close above $1,738 on H1 chart requires for the upside rally. Alternatively, a consistent close below $1,728 will drag the parity down back below $1,720 mark.

Key Resistances: $1,740, $1,748, $1,754, $1,762, $1,767

Key Supports: $1,728, $1,722, $1,715, $1,708, $1,702, $1.691

Take a look and do trade wisely!
Good Luck