Gold continues to trade in a familiar range that it has remained within over the past month, as investors await the Federal Reserve monetary policy decision on September 16. US Dollar crowding behaviour looks to be unwinding as retail traders turn net-long GBP/USD for the first time in four months
Gold Price Looks To FOMC and Changing Dollar Sentiment
Gold is holding steady after touching 50-Day SMA ($1922) for the first time in almost 3 months. Gold could remain in its familiar range amid a rebound from the monthly low ($1907) and as it awaits further direction from the Federal Open Market Committee (FOMC) meeting.
The FOMC monetary policy decision could change the outlook for gold in the short term as the Federal Reserve officials also update the Summary of Economic Projections (SEP).The closely followed dot-plot could show a downward revision to longer-term outlook as the Fed moves to average inflation target around 2%
In turn, lower expectations for Fed Funds rate could support prices of the precious metal, as the central bank remains accommodative in its stance. Furthermore, the macroeconomic environment could also underpin gold’s appeal as an alternative to fiat-currencies given that the expanding Federal Reserve’s balance sheet, which pushed back over $7 trillion last month.
Should the Fed continue along the same path as the June meeting a limited reaction could be seen as the Fed debates an outcome-based approach against a calendar-based forward guidance for monetary policy. Gold prices could carry on at these levels as for the rest of the month if USD crowding behaviour unravels