With all eyes on Wednesday's Fed statement, gold traders continue to play the range. The choppy trading in bullion has continued, marked by $10 to $15 swings. December gold futures reached a new low for this week at $1,338.30 on Tuesday night, but on Wednesday morning, the market has rallied back sharply, approaching $1,360.
The Fed is not expected to announce any adjustment in bond purchases in its Wednesday statement. But we will still get some insight about the health of the economy, and the Fed's plan.
We expect to see a directional move in gold following this statement.
A close to new swing highs this week above $1361.80, and above a major retracement level at $1364.10, will likely lead to a leg higher. A close below the major $1,341.40 to $1,342.50 retracement level and 50-day moving average will be damaging to the bull camp.
On the downside, only a follow-through and close below the 100-day moving average and key level at $1,323.50 to $1,324.40 will signal a leg lower.