Gold has been trading sideways since December, but all signs are pointing towards another gold bullish cycle. Ben Bernanke and company kept the benchmark interest rates at .25% this week during the FOMC meeting. In addition, the commentary still maintained a very dovish undertone.
All though there was a zero percent chance of a rate hike, investors where paying particular attention to the Central Bank’s Policy Statement. When the US Federal Reserve did not update their language in today’s commentary – reiterating that they will be keeping rates “exceptionally low for an extended period of time”- investors started turning back to commodities to hedge their positions.
Gold prices have modestly recovered from support at the $1100 level – ahead of resistance marked by a swing high on 03/03. This weeks policy statement could be the catalyst Gold needed to induce heavy buying, and start the next bullish wave.
On the technical side gold has been building a bullish base. Specifically, the base appears to be a complex head and shoulders (the head itself is a head and shoulders pattern). In order to complete the pattern, gold would need to break above 1146.
Fundamentally and technical gold looks to be strongly positioned for another bullish run. Today’s outcome should continue to keep pressure on the greenback and with the situation in the Euro-zone still uncertain the metal used as a safe haven in times of uncertainties should enjoy continued strong buying from investors world-wide.
Tags: Commodity Prices, Gold Prices
