Gold prices were higher in early morning trade today on the back of overnight gains which is being seen as a huge positive by traders and investors on the street. It is imperative to state that Gold prices plunged over the last couple of trading session and took support at the psychological support level of $1100. The only cause for concern for traders and investors has been the lack of buying support available for gold at higher levels. Traders believe the slowdown in China which is one of the biggest consumers of the precious metal is a huge negative for gold in the near term.
Traders and investors would shift focus to the FOMC meeting scheduled for next week with all eyes on the Federal Reserve with regards to its decision on short term interest rates and first steps towards normalization. Traders believe that the strong economic reports coming out of the US economy since the beginning of the year would provide the Federal Reserve enough head room to hike interest rates for the first time in close to a decade. Any rate hike would be seen as a huge positive for dollar and a negative for Gold in the near term.
When looking at the charts for Gold, the precious metal has been forming lower lows and lower highs which is indicative of the fact that bears are using every rally in the precious metal as a selling opportunity. The momentum indicators are currently trending lower which is a cause for concern for traders and investors. Traders believe that if gold breaks below the $1100 level in the near term, gold could swiftly move towards levels of $1072 in the near term. The resistance for gold continues to remain near the $1142 level on the upside at the moment.