XAUUSD Analysis on H4 Chart.

FOREXCOM:XAUUSD   Gold Spot / U.S. Dollar
Gold prices are nearing a key spot on the chart as Silver prices have already broken-out to fresh highs. It’s perhaps the backdrop with which these breakouts have shown that make the matter most interesting. Yields remain elevated and stocks are on their back foot; rates markets are pricing in as many as seven hikes out of the Fed this year with a median expectation for four 25 basis point adjustments. And while there’s been a lot of talk about Bitcoin replacing Gold as an inflation hedge, well that’s down, too, threatening to breakdown below the 40k support that came into the picture earlier in the week.

Next week brings the FOMC for the January rate decision and while there’s scant expectation for any actual moves at this meeting, the focus is on whether or not the bank highlights a March rate hike along with how they signal their plans for later in the year.

Perhaps the bigger question than even rate hike policy is the prospect of Quantitative Tightening, in the event that the Fed looks to whittle down the massive balance sheet that’s been accumulated since Covid came into the picture almost two years ago. At this point, QE is set to end in March – right as markets are looking for that first hike out of the FOMC. But, will the bank also take the next step in that direction by allowing bonds in their portfolio to mature without being replaced?

Gold prices have been building in a bullish channel ever since the December FOMC rate decision. That channel was buffered by a big spot of resistance at the 1830 spot on the chart and failed to break through after three attempts in the early-part of the year.

But, the 4th time was the charm when bulls pressed the bid yesterday. And that breakout still has yet to stop, as there’s been a mere pause in the move ahead of another key spot of resistance on the charts, plotted around the 1850 level.


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