Key Highlights
- Gold price climbed higher recently and broke the $1,240 resistance against the US Dollar.
- There was a break above a major bearish trend line with resistance at $1,242 on the 4-hours chart of XAU/USD.
- The US Housing Starts in Nov 2018 increased from the last revised reading of 1.217M to 1.256M (MoM).
- Today, the Fed Interest Rate Decision will be announced, and the central bank is expected to increase rates from 2.25% to 2.50%.
Gold Price Technical Analysis
After finding a strong buying interest near the $1,232 zone, gold price started a fresh upward move against the US Dollar. The price rallied and broke the $1,240 and $1,244 resistance levels.
The 4-hour chart of XAU/USD indicates that the price found support near $1,232 and the 100 simple moving average (red, 4-hours). There was a sharp bounce above the 50% Fib retracement level of the last decline from the $1,250 swing high to $1,232 swing low.
Moreover, there was a break above a major bearish trend line with resistance at $1,242. The price even surpassed the 76.4% Fib retracement level of the last decline from the $1,250 swing high to $1,232 swing low, opening the doors for more gains above the $1,250 resistance.
If the current trend remains intact, the price could extend gains towards the $1,255 level and the 1.236 Fib extension level of the last decline.
On the downside, an initial support is near the $1,244 level, below which the price could test the $1,242 support zone. Overall, as long as the price is above the 100 SMA, it remains in an uptrend and it could continue to rise towards $1,255 or $1,260.
However, today’s Fed Interest Rate Decision might impact the market sentiment for gold. Moreover, the current recovery in major pairs like EUR/USD and GBP/USD could face a strong resistance if the fed increases rates from 2.25% to 2.50%. On the other hand, disappointment may perhaps lead to a sharp dollar selling.
Economic Releases to Watch Today
- UK Consumer Price Index Nov 2018 (YoY) – Forecast +2.3%, versus +2.4% previous.
- UK Core Consumer Price Index Nov 2018 (YoY) – Forecast +1.8%, versus +1.9% previous.
- Fed Interest Rate Decision – Forecast 2.50%, versus 2.25% previous.
- Canadian Consumer Price Index Nov 2018 (MoM) – Forecast -0.2%, versus +0.3% previous.
- Canadian Consumer Price Index Nov 2018 (YoY) – Forecast +1.9%, versus +2.4% previous.
