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Gold Weakens Drastically Ahead of U.S. FOMC Interest Rate Decision, A Consistent Close Below $1,831 Requires for the Downside Rally; Jan 26, 2022

U.S. FOMC Interest Rate Decision

Today the key event for the day will be U.S. FOMC Meeting and Press Conference. The rate decision is usually priced into the market, so it tends to be overshadowed by the FOMC Statement, which is focused on the future. Short term interest rates are the paramount factor in currency valuation – traders look at most other indicators merely to predict how rates will change in the future. FOMC members vote on where to set the target rate. The individual votes are published in the FOMC statement. FOMC statement is among the primary methods the Fed uses to communicate with investors regarding monetary policy. It covers in detail the factors that affected the most recent interest rate and other policy decisions, along with commentary about economic conditions such as the future growth outlook and inflation. Most importantly, it provides clues regarding future monetary policy.

Traders are looking for the following clues for the Fed Chair Powell:

  • The month when FOMC Interest Rate hikes take place, most likely view is March 2022.
  • Does FOMC undertake 50 basis point hike or 25bp hike?
  • How much will inflation fall in reaction to the first rounds of tightening?
  • What will be the Employment targets and GDP forecasts?
  • Does FOMC issue any new guidelines regarding COVID- 19/Omicron?

Let’s see how gold has reacted during the previous data release:

Dec 15:

Nov 03:

Technical View:

XAU/USD (Gold):

  • The Gold spieks down sharply ahead of U.S. FOMC Interest Rate Decision.
  • Today pair made intraday high at $1,850 and low at $1,831 mark.
  • A day chart and H1 chart with triple EMA suggest up trend for the time being.
  • A sustained close above $1,852 on H1 chart requires for the upside rally.
  • Alternatively, a consistent close below $1,831 will check further supports.
Supports Resistances
$1,831 $1,854
$1,826 $1,860
$1,821 $1,864
$1,815 $1,871
$1,809 $1,876

Take a look and do trade wisely!
Good Luck

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