Gold Testing Key Support

Gold prices are sitting on a cliff edge here head of the FOMC minutes this evening. Following heavy declines, the futures market is once again testing the bull trend line from last year’s lows and look poised for fresh losses if we see USD move higher through the minutes this evening. Indeed, gold has been back under pressure despite a drop in near-term Fed tightening expectations on the back of Friday’s weak US jobs data. The NFP came in heavily below forecasts alongside an uptick in the unemployment rate and a further softening of wage growth. Market pricing for a hike this month dropped from around 50% to below 20% consequently with December rate hike pricing softening also.

FOMC Mins in Focus

Despite this, gold prices remain weaker today with USD still-bid as traders look for fresh hawkish input from the FOMC minutes later today. The strong hawkish shift in sentiment at the September FOMC means the details of those discussions are expected to be USD supportive. However, on the back of the recent jobs data weakness and softer oil prices, the extent to which USD is likely to rally in response to the minutes should be lessened.

Technical Views

Gold

The sell off in gold has seen price trading down to test the rising trend line from last year’s lows (contracting triangle lows) and the 4,092.60 level. With momentum studies bearish, risks of a fresh breakdown towards 3,940.25 are seen and a continuation of the bear channel from YTD highs.