Equity markets climbed in Europe yesterday
Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
Gold: FOMC Meeting Will Clarify the Future
Information is not investment advice
What will happen?
FOMC statement will be announced at 21:00 MT (GMT+3) on Wednesday, July 27. In the previous article, we have already mentioned the importance of this event. Analysts and traders will closely follow this meeting since the Federal Reserve statement about interest rates might make a huge effect on markets.
The must-watch comment is the one on tapering. This is what will determine whether gold rallies or sells off after the Fed meeting. And with growing concerns that the US economy will slow in the second half of the year, tapering might no longer be as urgent as it seemed just a few weeks ago.
If the Federal Reserve gives any kind of signals about stimulus tapering, it will put a negative effect on gold. On the contrary, if there are no sings of tapering, gold will get a boost.
Technical analyses
Daily chart
4H chart
The price is consolidating under the 200-period moving average. RSI oscillator got close to the buying zone. MACD shows that the bearish trend got weaker since June.
Dovish FOMC statement could help gold to break the 200-period moving average, which is highly important resistance. After the break, the price will have lots of space above. Targets will be $1830 and $1877, which are 38.2 and 50.0 Fibonacci levels respectively.
On the flip side, if FOMC gives signals about stimulus tapering, the price will drop and test 23.6 and 0.0 Fibonacci levels, which are $1772 and $1680 respectively.
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European Currencies Ahead of the Banks' Statements
On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.
Will the FOMC Surprise the Markets?
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.
What awaits the Oil Market in February?
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.
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