Gold was sharply lower in early trade this morning, having broken above $3,700 yesterday to post a fresh all-time high. Gold has gained around 11% over the past month as investors up their allocation to precious metals. At the beginning of September, it surged above its previous all-time high of $3,500 from back in April, and since then it hasn’t looked back.
But the daily MACD is looking quite stretched to the upside, even though it is not as overbought as it was back in April. Gold may need to pull back a touch from current levels, or at least consolidate for a period, to once again reset the MACD. Silver also fell sharply this morning, with its own daily MACD indicating that the metal is more overbought than at any time since May 2024.
Source: TN Trader
Short-term direction could depend on the outcome of tonight’s Federal Reserve rate decision. The CME’s FedWatch Tool continues to calculate a 96% probability of a 25-basis-point rate cut this evening. Traders also remain attentive to potential dissents, with two policymakers having broken ranks at July’s meeting, raising the risk of division once again.
But close attention will also be paid to the FOMC’s quarterly Summary of Economic Projections (SEP). This shows how individual FOMC members anticipate GDP, unemployment, inflation and the Fed Funds rate behaving for the rest of this year, and beyond. As far as the latter is concerned, analysts will focus on the FOMC’s infamous “Dot Plot” and how this may have changed since the last SEP back in June.
Finally, Fed Chair Jerome Powell will hold his usual press conference half an hour after the rate decision, FOMC statement and SEP is released. It seems quite likely that he will be quizzed about threats to the US central bank’s independence, given the Trump administration's attack on the institution, and its individual members. Analysts should also be on the lookout for any comments the Fed may make about its balance sheet.
