Everything You Need to Know About Gold – Fed Rate Cut in Highlights

Gold prices opened at $1492 and have placed a high of $1494.74 and low of $1483.5. It is currently trading at $1488.93 as of writing and has shown a bearish trend for this day. GOLD prices have shown a downward trend for the second consecutive day of this week amid increased demand for riskier assets. The rising hopes for a partial trade deal between the US & China were pressurizing the safe-haven assets and shifted the demand towards risky assets.

The movement of gold prices was seen towards downside on Tuesday, but in the late session, it lifted a little upward and regained some of its losses. The downward pressure was stemmed by weak macroeconomic data releases from the United States, which put pressure on the US dollar on Tuesday.

At 18:00 GMT, the S&P/CS Composite – 20 HPI came in as 2.0% against the expectations of 2.1% and weighed on USD. The dollar was further weighed down at 19:00 GMT after the release of closely observed CB Consumer Confidence, which dropped to 125.9 this month from 126.3 in the previous month.

However, the release of pending home sales data gave a little strength to USD, which came in at 1.5% and surpassed expectations of 0.9% for September.

The chances of the third rate cut by Federal Reserve in its meeting on Wednesday have declined after the partial trade truce between US & China and the grant of an extension of 3 months to the UK for an orderly Brexit from Europe. These two factors were heavily weighing on the decision of Fed for further rate cuts, but after the raised optimism in market related to these issues, it has now become uncertain that Fed would cut interest rates on Wednesday.

Gold – XAU/USD – Technical Levels

Support Resistance

1482.58 1493.83

1477.48 1499.98

1466.23 1511.23

Key Trading Level: 1488.73

Gold – XAU/USD – Trade Idea

Yesterday, gold violated the bullish trendline support at 1,490 areas, which triggered sharp selling until the suggested support area of 1,482. Today, the 1,490 level is likely to work as a resistance area and may keep gold prices bearish below this level. On the lower side, support continues to stay at 1,482 and 1,477.

Fellas, it’s going to be a busy day for the forex market, especially during the US session as we have FOMC and Fed rate decision later in the day. The Fed is most likely to cut the interest rate from 2% to 1.75%. Gold’s initial reaction on the rate cut is expected to be a sharp upward spike; it can go until 1,498/1,500 and then it may turn bearish as most of the rate cut is already priced in.