Gold Likely to Reman Range Bound

Gold prices have been caught in a tight mode of consolidation over the last 24 hours as the pair has been trading within the 1310 and the 1320 regions during this period. It has been difficult for the traders to trust the price action and invest or trade the instrument when such important announcements are lined up during the week. The most important of those is likely to come out today as we have the FOMC announcement where the markets expects the Fed to hike rates for the first time this year and for all practical purposes, this is confirmed and this is priced into the markets. This is unlikely to bring in too much of volatility but it is the accompanying statement and the press conference after that which is expected to bring in some volatility.

Gold Prices in Range

The reason for this is that the market expects the Fed to lay down guidelines and timelines for accelerated rate hikes but we believe that the Fed is not yet in a position to stick its neck out to get that done at this point of time. It would like to see some more data and see how the current rate hike would percolate into the economy before it starts thinking of more rate hikes and it is here that it is likely that the market would end up disappointed, at least for the short term and this could provide an opportunity for the gold bulls to push the prices higher in due course of time.

The oil prices also continue to trade within the larger range in a continuation of the ranging trend that we have been seeing in this market over the last few weeks. It is likely to continue in the medium, which we have been repeatedly mentioning in many of our forecasts over this period.

The silver prices are also range bound as the market awaits the Fed later in the day though we doubt whether any kind of announcement is going to be enough to break the range as of now.