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Gold at a crossroads as the Fed’s latest statement looms (GLD, SLV)

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Gold and Silver are basically flat today following the release of the latest retail sales data and before the Fed's latest policy statement, due this afternoon.

The SPDR Gold Trust ( GLD , quote ) was most recently trading slightly positive at $162.68 +$0.68 while the iShares Silver Trust ( SLV , quote ) was up by $0.36 at $30.69 in the first 30 minutes of trading.

On the futures front, contracts are up $7.70 to $1,676 an ounce on the Comex. Silver is up $0.70 to $31.72 an ounce.

Both metals are facing strong headwinds in the short term as the U.S. continues to strengthen. Most recently, the Commerce Department's latest retail sales report showed a slight uptick of 0.2% in November, below expectations.

On the technical side, gold continues to break down. Yesterday's close put the price squarely on the 150-day moving average, which has been acting as support now for over 3 months.

Today we see price piercing the 150-day moving average and the long-term upward trendline only to trade back above slightly.

Looking at a daily chart from September through today trades can see a small head and shoulders formation with a slight incline.

Using the rule of thumb that the distance from the head to the neckline will predict the corresponding move will put price right on the next support level of about $1,604.

Drawing Fibonacci levels from the high of $1,923.70 on September 6 and the next low of $1,535 on September 26 traders find a retracement of price to the 0.618% level suggesting a move to the -1.618% extension of $1,288.

Gold bulls could find support for a possible reversal at the support level at $1,604, the next support level is the at the Fibonacci B swing / price support with the last level of support hovering around the -1.18% Fibonacci level. Otherwise it looks like the bears will try to takeout the January low of $1,309.10 -- just 21 pips above the D extension.

On the fundamental side, traders will be watching the U.S. Federal Open Market Committee (FOMC) issues its statement on monetary policy at 2:15 p.m. EST.

Analysts are expecting the FOMC to keep its key interest rate at a historic low range of zero to 0.25%. Investors are likely to look for signs by the Fed on its views regarding the economic recovery.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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