Gold rallies after Fed expressed worry over strong US dollar

Omkar Godbole FXStreet Contributor

FXStreet (Mumbai) - Gold prices rose to a fresh daily high of USD 1124.10 after the FOMC statement took note of the adverse impact of the strong US dollar on exports and inflation.

Above 50% fib level

The prices are hovering above 1118.85 (50% of Oct high-Dec low). The US stocks remain in red, while the USD index is largely resilient around 99.00 levels. Still, the yellow metal managed to clock fresh session highs and that may be due to a moderate weakness in the 2-yr treasury yield, which mimics short-term rate expectations.

At USD 1122; the metal is up 0.16% on the day. The upside is being capped as the Fed reaffirmed their plan to tighten policy gradually.

Gold Technical Levels

The immediate support is seen at 1113.15 (Jan 8 high), under which the prices could drop to 1105.08 (50-DMA). On the other hand, a break above 1131.26 (200-DMA) would open doors for a rally to 1136 (61.8% of Oct high-Dec low).

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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