Fxwirepro Short Term Outlook: Gold May Test $1180 Support Over FED Hike
Gold has suffered big downfall last week, making it the worst in at least two months, over hawkish statements from several FOMC policymakers and FOMC minutes that strongly indicated that June meeting is very much alive and many are ready to push for a hike in that meeting.
With Explicit signal from FED, it is more likely now, that Gold will consolidate here, with downside bias. It is likely to find support from risk aversion, if equities and oil slide, whereas stronger Dollar will keep upside in check. This is likely to continue at least till the FED meeting in June, scheduled on 14th and 15th.
Key major event risks that lie between are non-farm payroll report early in the month and Janet Yellen’s speech on June 6th, just before the blackout period.
With such theme at play, it is more likely that Gold bears will try to push lower and test key support around $1180 area. As of now, it is less likely that gold will venture beyond that but a break of that level could push it towards $1100/troy ounce but that isn’t the base case scenario in the short run.
In the longer run, we remain bullish on Gold, so will look for opportunities to buy the metal as big dips.