Why is growth important technically?
Breakout confirmed. The move closed a breakout above the October high of $4,034. Price had not been above this level for 23 days.
Signal on the daily chart. A reversal candlestick formation has formed there.
- DXY +0.6% over three days - the dollar index moved above 102.00
- Two-week high for the dollar, and a strong dollar usually pressures the metal
What supported the metal?
Oil. WTI lost more than 1% and dropped to $100.05 per barrel. On Monday it traded above $100.
Cheaper oil lowers inflation expectations, and this removes some of the arguments for a tight Fed policy and helps gold.
Tuesday's data came out mixed:
- 91.7 - Conference Board consumer confidence index, previously 84.2
- +1.8% - durable goods orders in September versus +0.1% previously
- 5.8% - inflation expectations, unchanged
- Weaker than forecast - housing data
What awaits the trader next?
The main event is Wednesday, October 28. On this day, the Fed decision and the speech of its head, Kevin Warsh.
- The rate on Wednesday. The money market estimates the probability of a hike at this very meeting at 9%.
- December. The probability of a 25 basis point hike is 83%, versus about 90% a week earlier.
- Thursday. ECB meeting, US GDP and core PCE index.
- Friday. Bank of Japan meeting.
All these dates are in the economic calendar.
Which levels to keep on screen?
Above the trendline near $4,100, then $4,200, the 100-day moving average at $4,219.
Below the round $4,000, Friday's low of $3,975 and the yearly low of $3,941.
Key point: gold rose despite a strong dollar and rising yields. The Fed decision on Wednesday will determine whether the price holds above $4,034.
Did you see this bounce from $4,000?
Many saw the reversal from the round level. Almost no one had it reflected in their account. Seventy dollars of movement in the metal on a deposit of a couple thousand is a dinner; on an account of one hundred thousand it is a closed monthly target. The difference here is not in the analysis, but in the nominal you stand behind: the prop company provides it after a passed challenge - for a share of the profit and according to its own rules. Less than a day remains until the Fed decision. It is calmer to sort out the mechanics before it, rather than after another missed move.