• Gold is trading over half a percent higher on Friday and 0.75% higher on the week.
  • This is a massive congestion area, but there are some key levels around.

Gold 4-hour chart: The main levels to watch leading into next week

Gold has been consolidating heavily over the last month and this week's Fed meeting did not inspire a break in either direction. Looking closer at the 4-hour chart below, the next main level of resistance is at the green resistance line at USD 1973.54 per troy ounce. Beyond that, there is the USD 2K psychological level and purple line at USD 2015.65 per ounce. A break of these key levels could lead to a test of the all-time highs. 

On the downside, there is lots of traffic that could support the price. The orange trendline has been used on three occasions to great effect. Beyond that, the main consolidation low stands at USD 1915.50 per ounce. The interesting thing about the price action is the fact that there is both lower highs and higher lows. There is no point analysing the indicators are they are both in the mid-zone. Overall, a break to the upside looks more likely at the moment and the green resistance is the one to watch for next week.

Gold leading into next week

Fundamental backdrop: The US Federal Reserve is still stalling

With the US election coming up it is not a major surprise that the Fed did not make any major policy changes, but we did get some info from the US central bank. The dot plot indicates that the FOMC members do not think rates will rise until 2023. This is longer than some analysts had been expecting and the long end of the rates curve reacted as much. The market seemed like they were waiting for some information that never came. The Fed is still asking for more fiscal support from the government and there were some outside calls that the Fed may act because of the lack of progress. 

Next week: PMI's are back in focus

There are lots of central bank speakers and data points to look forward to next week. The main event will be the PMI's as this will give investors an idea of the state of the global economy. As these numbers are from September, there could be some continued improvement and last months numbers were in expansionary territory. Fed Chair Jerome Powell is set to speak twice and at any point, we could get more of an indication of the central bank's (Fed) thoughts. Although it may not impact gold massively, the market will get the latest thoughts from the BoE who have been talking about implementing negative rates

FX Street Calendar

Gold forecast poll

Looking at the forecast, in the short term pollsters believe that the price will drop, but then the quarterly view is that the price will break USD 2018 per ounce again. So bearish in the short and medium-term and back in line with the trend over the long-term.

Gold forecast poll

Links to other gold-related articles

Gold: Politics to be a driver for the precious metal – TDS 

Gold Price Analysis: XAU/USD near strong support, eyeing $1,969 on the upside – Confluence Detector

 

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