Gold trades flat above $1270, eyes on FOMC
The ounce troy of the precious metal trades in a tight range against the greenback on Wednesday, with the XAU/USD pair now at $1273.50, up 0.15%, or $2, on the day.
After falling for two consecutive days and losing nearly $20, the pair seems to have entered a consolidation before the FOMC releases its July meeting minutes later in the NA session. Moreover, the greenback's recovery momentum lost some strength on Wednesday as investors wait to see what the Committee discussed regarding the timing of the balance sheet reduction and the inflation outlook. At the moment, the DXY is at 93.93, up 0.2% on the day.
In the meantime, following yesterday's choppy session, major equity indexes in the U.S. started the day on a positive note on Wednesday with the Dow Jones Industrial Average and the S&P 500 both gaining 0.4% at the moment, pointing to an improved risk sentiment.
Danske Bank analysts argue that focus will remain on the discussions of the timing of quantitative tightening and any comments on how concerned the Fed is about the low inflation which it now describes as 'below 2%'.
Technical outlook
The CCI indicator on the daily graph is moving sideways near the 0 mark, suggesting a near-term neutral outlook for the pair. The first technical support could be encountered at $1268 (20-DMA) followed by $1256 (Aug. 2 low) and $1251 (Aug. 8 low). On the upside, resistances align at $1279 (Aug. 15 high), $1291 (Aug. 11 high) and $1300 (psychological level).
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
