Despite bouncing off multiple troughs marked during mid-May, gold holds onto Monday’s rising wedge confirmation, suggesting further downside. However, nearly oversold RSI joins the horizontal support around $1,810 to test the intraday bears ahead of the US Federal Reserve’s (Fed) monetary policy meeting. Should the quote drops below $1,810, a downturn towards the previous monthly low surrounding $1,786 appears imminent. Following that, the 61.8% FE level near $1,750 could lure the metal sellers.
On the flip side, recovery remains doubtful until the quote rises back beyond the wedge’s support line, now resistance around $1,848. Even so, an upward sloping trend line from late May near $1,880, forming part of the bearish chart pattern, could restrict the bull’s entry. In a case where the gold prices rally beyond $1,880, the odds of witnessing a run-up towards the $1,900 threshold and then to the late April swing high surrounding $1,920 can’t be ruled out.
On a fundamental side, the Fed has already made it clear that it will announce a 50 bps rate hike but the markets have priced in a 75 bps move. If the US central bank adheres to aggressive action, the gold prices may witness further downside.