Gold finally broke out of the consolidation after being range bound for nearly 11 days. The correction to the downside was expected as gold traded in the overbought territory. Just before the breakout, RSI in the daily chart was at the highest level since March 2022. Yellow metal has been in an uptrend since early November. However, a continuation of this strong trend depends on how well the bears perform around the psychological support of 1,900.
Although in the short run, gold seems bullish, negative data from across the world could put pressure on gold to the downside and move investors to other instruments like cryptos and stocks.
We have seen several encouraging fundamentals in the past week: better than expected US GDP, positive data from the National Bureau of Statistics of China, and IMF raising the global growth forecast…this could prompt the Fed to be less dovish in the upcoming, much-anticipated rate hikes.
In intraday trading, Gold is down by at least 1%. Gold bears have managed to push the market down. The psychological support of 1,900 is being tested, which coincides with 21 MA. There would be pushback from the bulls around this key support area, notably visible in the smaller time frames.
Significant volatility is expected as the US Federal Reserve kicks off its two-day monetary policy meeting later today. The bears could push the market to around 1,850 support-area. On the upside, bulls would be looking to test the 1,950 resistance area if the market deems the fed's rate hike significant.