The price of gold this afternoon remains slightly lower
by 0.43% or -$6.00 to $1,381.60 as gold traders remain on the
sidelines ahead of the Federal Reserve policy meeting and
statement this Wednesday.
Gold has been range bound since mid-May trapped both by the
fundamentals and technicals which looks to be coming to a point
of price breaking out.
On the fundamental side gold prices are put under pressure
when the Federal Reserve Bank of New York reported General
Business Conditions jumped to 7.8 for June compared to negative
reading for May of 1.4. Expectations were for an
improvement to -0.5 for June.
As a result in improving fundamentals speculation in the gold
market of the Federal Reserve beginning its big unwinding of the
QE1 - Q3 is pushing gold lower.
You can look at a gold chart and see the effects of the
continuing changing speculation view of the Federal Reserve's
talk of tapering coupled with good economic news.
Looking at the daily chart of gold and we find a technical
picture lining up with the fundamentals. The price action
in gold has been range bound pushing price into a wedge pattern
suggesting a break move is nearing. In fact when drawing
the trendlines of the two lines involved in the pattern we find
about two more days before the end of the pattern….hmm right in
time for the Fed statement.
Providing strength to a downside move is the current Fibonacci
wave is to the downside with a .50 retracement in which price
moved between the .382 retracement and the "B" side of the swing
and consolidated since. Further suggesting a bearish tone
in gold is price well below the 150 and 200 day moving averages
as well as the bottom side of the T3 Tilson.
Volume in the gold has been tapering off the last 5 trading
sessions as wait for the Fed statement even furthering suggesting
price is coiling - possibly waiting for the Fed statement.
Those looking to setup breakout entry point on either side of
the pattern in the equities markets rather the futures can use
the SPDR Gold Trust (GLD, quote) ETF. The GLD options now
also come in mini option contracts for those looking to reduce
risk even further.