Gold is looking weak ahead of FOMC. The expectations from the FED are high, the markets already pricing the 75 points hike. Friday’s CPI data change the market expectation for the higher but the lack of talk from the FED members means that it is not a sure thing.
The most key points in tonight’s meeting are today’s rate hike, the possibility of a 75-point hike in the incoming meetings, and the FED forecasts, especially the dot plots.
Today the expectation is at 75 points but FED can easily be satisfied with 50 points. A 50-point hike and 50 talks for the future meeting might give gold a massive boost. On the other hand, a more aggressive, hawkish FED might cause a breakout to the downside for Gold, which is already priced with a big premium relative to the real yields. A break to the downside can lead to panic sales.
1800 (trend line), 1765, and 1675 are the major support levels. If Gold can hold above the 1800 support this week, an upside rally to over 2000 is within possibility. Tonight’s FOMC decision might be a trend-changer one.
