Is Gold Looking for a Bullish Break?

As increased volatility from the pending FOMC meeting and potential rate hike spreads around the globe, Gold looks like it might be preparing to shine, albeit in the short term.

The precious metal has been on somewhat ofa rollercoaster over the past few weeks as it steadily trended lower nearingthe key $1,000 an ounce level. However, the past few days have seen aresurgence as gold appears to be finally ready to complete the final stage of abullish crypto pattern as it looks towards the reversal zone.

In addition, MACD is now also signallingthe potential for a bullish move with the indicator lines having crossed beforetrending higher. Given the recent highs, MACD is actually quite depressed andthere is definitely scope for a move higher. In contrast, RSI continues tosteadily trend higher within neutral territory signalling that there is plentyof room to move on the upside.

Further supporting the bullish contentionis the fact that a cypher pattern is in the final stages of completion withprice action looking to move higher to complete the “D” leg. Subsequently, an upside target of $1088.40 isappropriate and represents a reversal zone where rallies could potentiallysold. On the downside, major support exists at $1060 an ounce and any breaksbelow could see the commodity declining sharply to around $1040.

However, keep a close watch on the USeconomic news in the lead up to the much awaited FOMC meeting. The market islargely bullish on a rate hike and is ravenously hungry for data which willfuel the case for the Fed. Subsequently, the US Unemployment Claims figures arelikely to be monitored closely by the market and could cause some sharp volatility.

Ultimately,Gold is likely to see some relatively sharp swings, within the $1044 - $1100range in the coming days, as pressure builds prior to the interest ratedecision. This volatility should provide plenty of play for traders, however, bemindful of the looming risk event and the fact that the odds are stackedagainst the precious metal.

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