The coming two days are expected to finally provide a directional cue for the market.

  • The Gold the market witnessed a rally during the trading session on Wednesday as traders eagerly awaited the Federal Reserve’s announcement.
  • Currently, the market appears to be locked between the $1950 level acting as substantial support and the $2000 level serving as significant resistance.
  • 50 day exponential Moving average it sits squarely in the middle and underlines a key “holding pattern” in the gold market. This makes sense when we are waiting for such important breaking news.
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This holding pattern is expected when influence is taken into account Federal Reserve System Wednesday’s statement and Thursday’s European Central Bank statement. These key announcements have the potential to generate significant volatility. Over time, the market appears to be evaluating its stance on a more significant move. In the short term, however, the market appears to be oscillating within a defined range and attempting to gauge momentum for a longer-term move.

If the market breaks below the $1950 area, it could pave the way for a downward move towards the 200-day EMA, near the $1900 mark. On the contrary, if the market reverses and breaks the $2,000 level, it could trigger an upside to the $2,050 level, which was previously a significant barrier. Breaking this hurdle could likely prompt the market to test the $2100 level, an area that has served as major resistance three times in the past few years. A break at the top would be monumental to say the least.

The coming two days are expected to finally provide a directional cue for the market. While there is a basic assumption of the continued presence of buyers, the potential for central banks to unsettle markets and thereby cause gold prices to fall cannot be denied. Currently, the market seems set to continue volatility and jerkiness within this narrow range. However, these oscillations are expected to end soon.

Market participants should keep a close eye on the next bullish candle as it could provide crucial insight into the future direction of the market. Once the central bank statements are released, they are bound to significantly affect the dynamics of the gold market. The current holding pattern may soon give way to a more decisive move and traders should be on the lookout for these shifts. This market cannot stay in this pattern forever and therefore it is possible that the market will give us a great signal for longer term trading.

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