Trading Gold was somewhat frustrating following the ultra dovish FOMC meeting.
The outcome was supposed to see a USD collapse on the back of the clear message that, now was not the time to change policy, no tapering or thinking about the tapering of bond purchases by the Federal Reserve.
Maybe, the market didn’t fully believe the Fed, or maybe it was month-end flows and profit-taking pressure. The USD did the opposite of what was expected and strengthened taking Gold with it back to 1766.00
That’s all history now, as we start a new week and a new month, with it, came the return of doubts over sustainable USD strength., Gold came roaring back to attack the recent highs reaching 1797.00 before slipping back to support at 1788.00.
This was view reinforced by a poor headline for April Manufacturing ISM. missing the expected robust growth of 65, to post a modest 60.4. However, much of the miss was due to supply chain bottlenecks.
The Break of the post FOMC high of 1788.00 could be the key that has opened up 1800.00 again. Gold Bulls will be hoping that this area holds, or at least the pivot of 1782.00/1784.00 provides support to give the market traction to take out 1800.00
However, this morning in early trade the USD has made some gains, putting pressure on Gold, so far support has held. Whether the USD can continue to strengthen remains to be seen. Bears will be looking to break below 1788.00 level, and then attack 1782.00.
If Gold holds on to its support the next levels of resistance will be at 1796.00/1798.00 before taking out the psychological 1800.00 level.
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