Gold: Bid for third straight day as dollar remains on defensive ahead of the Fed

Gold is creeping up, amid a weak tone in the US dollar - gold's biggest nemesis.
The Fed is expected to revise lower 2019-2020 interest rate forecasts.
Gold needs a break above $1,311.

Omkar Godbole FXStreet Contributor

Gold is reporting moderate gains at press time, possibly tracking the weak tone in the greenback ahead of the Fed.

The yellow metal is currently trading at $1,305, representing a 0.16 percent gain on the day, having rallied 0.5 percent and 0.11 percent, respectively, in the previous two trading days.

The dollar index (DXY), which tracks the value of the greenback against majors, is currently trading in the red at 96.48 and may suffer deeper losses below March 13 low of 96.39, as the US Fed is widely expected to keep rates unchanged on Wednesday and signal less inclination to hike rates in 2019 and 2020.

The dovish Fed expectations, however, seem to be boding well for the equities. For instance, the S&P 500 index gained 0.37 percent yesterday and UK's FTSE strengthened 0.98 percent.

Euro Stoxx 50, however, ended with marginal gains and the Asian stocks are currently trading mixed.

Should the global equities pick up a strong bid ahead of the Fed, the haven demand for the metal will likely drop. In that case, gold may have a tough time breaching $1,311.

Technically speaking, a break above that level would establish a bullish higher high on the daily chart and may bring further gains toward $1,330.

Technical Levels

1. R3 1315.9
2. R2 1311.3
3. R1 1307.49
PP 1302.89
1. S1 1299.09
2. S2 1294.49
3. S3 1290.68

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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