Even with the drop so far today, gold is up roughly 0.6% on the week and is keeping over 6% gains this month. Not bad for what is supposed to be a soft seasonal month for the precious metal, eh?
For today though, gold is back down to $3,665 currently after briefly clipping the $3,700 mark in overnight trading. This is mostly profit-taking as traders are gearing up towards the Fed decision later in the day.
The chart still points to gold keeping a more bullish momentum in the bigger picture. That especially after the break of $3,500 earlier this month.
As we look to the Fed later, there is scope for a modest pullback and shift in near-term momentum if the dollar manages to bounce back. The 100 and 200-hour moving averages for gold are at $3,658 and $3,636 respectively. So, a break below those levels will see sellers gather back some near-term momentum at least.
However, all of that is still likely to be temporary and short-lived. So long as US data continues to soften and the Fed stays on track to cut rates further, gold will continue to build on that tailwind alongside the many other factors driving the bullish momentum.
I'd be remiss not to point out that there is scope for a sharp and violent pullback in gold prices amid the incessant rally all through this year. But in the bigger picture, I will continue to advocate for dip buying in gold on any major pullbacks/corrections.
