Gold price remained range-bound as investors eye the FOMC meeting minutes scheduled for release later on Wednesday. This comes amid the ongoing talks over the US debt ceiling.
Gold price has been on consolidation mode for close to a week now as the US dollar holds firm ahead of the Fed meeting minutes. In recent sessions, lack of progress of the negotiations over raising the US debt limit has been the currency’s key driver.
The country is just a week from the deadline. According to US Treasury Secretary, Janet Yellen, failure for Democrats and Republicans to reach an agreement before the set deadline may result to insufficient funds to operate normally. Subsequently, a stronger greenback has made gold more expensive for buyers holding foreign currencies.
Investors will carefully evaluate the FOMC minutes for cues on where the central bank’s interest rates are headed. Some of the bank’s officials have maintained a hawkish tone, indicating that the rates may remain higher for longer. Such a tone may lead to a rise in Treasury yields while weighing on the non-yielding bullion.
Gold price prediction
Gold price has been range-bound since late last week; trading between 1,950 and 1,985. Indeed, I expect it to remain within this horizontal channel in the short term as investors await further cues from the FOMC meeting minutes. As at the time of writing, it was at 1,976.71.
A look at its daily chart shows that the precious metal is hovering around the 50-day EMA while still trading below the 25-day EMA. As it stands, the bears are looking to break the crucial support at 1,950 to the lower level of 1,934.67.
Granted, the bulls still have an opportunity to yield a rebound. Even so, it may remain below the support-turn-resistance zone of 2,005 for a while longer.