Gold is teasing bull breakout after bullish outside-day candle

  • Gold created a bullish outside-day candle yesterday, despite hawkish Fed rate hike.
  • Signals increased odds of a bullish break of the pennant pattern.

Gold could finally find acceptance above the $1,300 mark as the yellow metal posted gains yesterday despite hawkish Fed rate hike.

The Fed hiked rates by 25 basis points as expected and signaled two more rate hikes this year (total 4 rate hikes this year). Initially, the zero-yielding metal ran into offers as markets priced-in prospects of the faster Fed rate hike.

But, investors soon realized that Fed has kept the neutral rate unchanged around 3 percent, meaning the current policy tightening will end sooner-than-expected. Also, Fed's Powell had no clear answer when quipped about monetary policy after rates hit neutral levels. Consequently, the dollar surrendered gains and the metal recovered to $1,300.

As of writing, the yellow metal is changing hands at $1,298; still stuck inside a pennant pattern. However, yesterday's bullish outside-day candle has raised hopes of an upside break of the pennant.

Gold Technical Levels

Resistance: $1,303 (June 7 high), $1,307 (200-day moving average), $1,313.50 (100-day moving average).

Support: $1,291 (previous day's low), $1,288.33 (June 1 low), $1,282 (May 21 low).

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