Gold Weekly Analysis: Buyers ran into resistance last week and hoping for a dovish hike.

Last week, gold markets attempted to rally, but fell short of the $2000 mark. However, we have noticed a bit of exhaustion, which indicates hesitation.

Keep in mind that gold is currently choppy, and I believe it will be difficult to hold onto it for a longer-term position, so you should keep your position size reasonable. The interest rate differential will continue to be the primary driver of what happens in this market, as the US dollar is highly sensitive to fluctuations against the euro and other major currencies. As the US dollar falls, the gold market benefits, but we have seen significant strength later in the week to indicate greenback buying.

Fundamental Analysis

Gold markets will be mostly moved by the strength and weakness of US Dollar as we have FOMC Interest rate decision on Wednesday this week. It is widely expected that interest rate will be hiked by 25 basis points, and the markets have mainly priced in that expectation. What is important will be the interest rate statement and Fed Chair Powell’s stance on future rate hikes. If the statements are dovish, it could weaken USD and therefore Gold will rally.

Our expectation

We expect the market to initially fall and then raise correctively towards 1970 zone before the interest rate decision, at which point Gold could fall if USD strengthens as the result of interest rate decision. In an alternate scenario, Gold could go up impulsively if USD weakens as a result of a dovish rate statement.