Gold traded in a consolidative mode on Tuesday, staying within the 1342 (S1) support and 1358 (R1) resistance lines. Ahead of the latest FOMC meeting minutes investors look to be indecisive on which way to push the precious metal.
Hawkish Fed talk boosts the dollar After being weak for most of the European day yesterday, the dollar rallied despite disappointing CPI data for July, following some hawkish remarks from NY Fed President William Dudley.
The Fed official said that we are edging closer to the time to raise rates and that the markets are currently too complacent and underestimate the possibility of a rate hike as early as at the September meeting.
Later in the day, Atlanta Fed President Dennis Lockhart added to this hawkish rhetoric, and said that at least one rate increase could be warranted this year, with two hikes being a possibility as well.
Today, market focus will be on the FOMC meeting minutes, with any hawkish tilt adding to the greenbacks recent recovery.
As a result, I would prefer to take the sidelines for now and wait for Gold to break in either direction to determine the near-term bias.
Taking a look at our momentum studies, I see that both of them point sideways, enhancing my case to stay flat for now and wait for a clear directional signal.
Zooming out to the daily chart, I see that the metal is trading above the uptrend line taken from back at the low of the 17th of December. In my view, this keeps the longer-term picture positive, but given the lower peak formed on the 5th of August, I prefer to take the sidelines for now with regards to the broader picture.
Support: 1342 (S1), 1330 (S2), 1320 (S3)
Resistance: 1358 (R1), 1367 (R2), 1375 (R3)