Gold inched higher on Friday after hitting the lowest level in more than 12 months as the Federal Reserve increased its benchmark interest rate for the first time in 2016 and signaled three more increases next year. The technical bias remains extremely bearish because of a lower low in the ongoing downside wave.
As of this writing, the precious metal is being traded around $1133 an ounce. A support may be seen near $1122-$1100, the confluence of a short term horizontal support as well as psychological number as demonstrated in the given below daily chart. A break and daily closing below the $1100 support zone shall incite renewed selling interest validating a move towards the $1070 support area.
On the upside, the precious metal is likely to face a hurdle around $1142, a major horizontal support turned resistance ahead of $1200, the psychological number and then $1241, the horizontal resistance area. The technical bias shall remain bearish as long as the $1337 resistance is intact.
Fed Rate Hike
The U.S. Federal Reserve raised interest rates by a quarter point on Wednesday and signaled a faster pace of increases in 2017 as the Trump administration takes over with promises to boost growth through tax cuts, spending and deregulation. The rate increase, regarded as a virtual certainty by financial markets in the wake of a string of generally strong economic reports, raised the target federal funds rate 25 basis points to between 0.50 percent and 0.75 percent. Bond yields and the dollar rose after the rate decision while stocks were mixed with financials and tech the only two sectors to show gains.
Considering the overall technical and fundamental outlook, selling the precious metal on short term rallies appears to be a good strategy.
Trade global forex with the Innovative Broker of 2022*. Choose from 50+ forex markets 24/5. Open your FXOpen account now or learn more about making your money go further with FXOpen.
* FXOpen International, Innovative Broker of 2022, according to the IAFT
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.