The pace of the decline has been surprisingly sharp, prompting us to consider whether the recent rally to 1434 has been an ABC correction within the wider, continuing, down trend. The fact that the sharply falling dollar has not lifted gold prices is of particular concern for the bulls and demonstrates the underlying strength behind the recent decline in gold.
A head and shoulders pattern appears to be forming on the daily chart, suggesting support at 1270 and resistance at 1350, with a drop below 1270 confirming 1180 as the next target.
The FOMC statement may result in wild gyrations in the short term gold price and will also affect the dollar. There is widespread expectation for a start to QE tapering, though some doubt still remains due to the mixed economic data in recent weeks, particularly the weak Non Farms Payroll number for August and July.
Equities are powering higher again, diverting funds away from gold as investors again chase yield.
Today's video for subscribers looks at the recent trading in more detail and our strategy for our next trade.