Gold Prices Continue to Oscillate in a Tight Trading Range
Gold futures closed higher on the day, with the most active Comex contract (December) currently up $5.40 at $1,208.30. However recent pricing in gold can be best characterized by the tight and narrow trading range, with major support at $1,190 and major resistance at $1,218.
Since the last week of August, gold has effectively been trapped within a $30 trading range. Over the last 17 trading days, gold has closed higher on the day when compared to its opening price on nine occasions and closed lower on the day eight times. Obviously only a minimal price advance or price decline will emerge from this type of oscillating market.
With the FOMC meeting scheduled to begin next week, and the fact that it is highly anticipated that this meeting will result in an interest rate hike, traders and investors are trying to gauge the net effect of higher interest and the 10% tariffs on imported Chinese goods which will begin on September 24.
Regardless of the outcome, next week promises to contain extremely relevant fundamental information that could, in fact, move gold out of the recent narrow and defined range that has defined its pricing.
Currently, the CME's fed watch tool predicts there is a 94.4% probability that the Federal Reserve will raise interest rates by a quarter percent next week and a 5.6% probability that they will raise rates by a half a percent. In other words, the Fed Watch tool is predicting that there is 100% probability that higher interest rates from the Federal Reserve (fed funds rate) will be implemented next week.
Last week the FedWatch tool was indicating a 99% probability that the Fed will raise interest rates by a quarter percent (25 basis points) at the end of next week's FOMC meeting.
The real question becomes what the endgame of the Federal Reserve is in regard to where they believe interest rates should be to accomplish their goal of quantitative normalization. To that end, traders and investors will focus intently on comments emerging from next week's meeting.
For those who would like more information, simply use this link.
Wishing you as always, good trading,
By Gary WagnerContributing tokitco.com
Follow @garyswagner
gary@thegoldforecast.comwww.thegoldforecast.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.