Gold (XAU/USD) survives another attempt on $1,147 ahead of Key Fed Meeting

The [B]Fed’s two-day policy meeting[/B] that begins on Tuesday will be the highlight of this week. Recently speculation has grown that the Federal Reserve will begin to increase interest rates sooner than expected as the world’s largest economy is in a healthy situation and much better than other countries, however, the oil prices and the low inflation keep the Fed cautious. Note that the Federal funds rate has been at record lows since the financial crisis that began in 2007.

[B]Gold [/B]continued to tumble, with the yellow metal dropping more than -5.40% to a two-month low ahead of the Federal Reserve monetary policy meeting. The yellow metal dropped to its lowest level since Dec. 1 of $1,147.00 last week after the stronger-than-expected US NFP report, which showed that 257k jobs were added to the US economy.

The precious metal rebounded from the key support zone of $1,142 – $1,147 and moved slightly higher towards the key resistance level of $1,170. The downward trend in the metal is certain clear, with strong and consistent selling coming off the back of a break below the crucial and psychological level of $1,200. On the 4-hour chart the descending trend line, as well as the 50-period SMA, both are continuing to provide resistance for the metal while the Relative Strength Index indicator is in process of crossing above 50, reflecting the pullback from the aforementioned zone. Furthermore, given that the precious metal has a Stochastic moving higher from oversold areas, along with the MACD which is moving higher, it opens the cards for a possible upside and a retest of the descending trend line.

This may reflect that the bears have lost some momentum with the bulls coming back into play, or on the other hand, we could be seeing further consolidation towards the key support level of $1,142 ahead of the Fed policy meeting. A decisive break below the $1,142 level, I would expect the bears to drive the battle towards the $1,130 level, territories not seen since November 2014. Ultimately, if the bulls are strong enough to push the price further up and above the $1,170 barrier, I would expect extensions towards the next level at $1,180, which includes the descending trend line.

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