Gold prices are rising, with XAU/USD now above $3,350 and approaching the peak of a symmetrical triangle pattern. Recent U.S. housing data shows improvement, with Building Permits up 0.2% and Housing Starts jumping 4.6% in June. The preliminary consumer sentiment from the University of Michigan for July has risen to 61.8, up from June’s 60.7. Inflation expectations are easing too, as the one-year forecast dropped from 5% to 4.4%, while the five-year expectation fell from 4% to 3.6%.

Federal Reserve Interest Rate Decision

The Federal Reserve is maintaining interest rates between 4.25% and 4.50%. Markets see a 57.8% chance of a 25 basis-point cut in September. Some Fed members suggest no cuts are coming soon, while others predict reductions by 2025. Gold faces resistance at $3,362 and $3,371, with a potential rise to $3,400 and the April peak at $3,452. If it falls, support is at $3,324 and $3,292, with a further drop to $3,228 possible. An RSI of 54 shows balanced momentum, as traders watch for market updates. Central banks aim to stabilize prices using interest rates. They adjust these rates to control inflation, with policymakers often labeled as ‘doves’ or ‘hawks’ based on their preferences. Policy decisions are made after coordinated discussions, and there is a blackout period during which officials can’t comment publicly.

Market Volatility And Trader Strategies

Gold is nearing a crucial technical point at the top of its symmetrical triangle. A strong move past the $3,362 resistance could indicate a rise towards $3,400. Traders should be ready for heightened volatility as gold tests this limit. Market expectations of a rate cut are a key driver in the current price. The CME FedWatch Tool shows over 55% probability for a 25 basis-point cut by the September meeting. This outlook is supported by recent data indicating the Consumer Price Index (CPI) has decreased to 3.1%, giving policymakers more reason to consider easing. However, there are signs of economic strength. The rise in housing starts and better consumer sentiment may argue against an immediate rate cut. This data suggests the central bank may take a cautious “wait-and-see” approach. Historically, uncertainty before policy decisions often leads to increased implied volatility, making options more appealing for sellers and more considered for buyers. Traders in derivatives should think about strategies like long straddles or strangles to profit from possible big price changes, regardless of direction. Given the mixed signals from Fed members, we’ll be closely watching their public comments in the coming weeks. Statements from hawks could lower expectations for a cut and push gold toward support at $3,324. In contrast, dovish comments could lead to a rally beyond resistance. The blackout period before the next meeting will be a key time for positioning based on the latest available insights. Create your live VT Markets account and start trading now.

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