Gold extended upside movement on Wednesday for the third day in a row, increasing the price of the yellow metal to more than $1235 an ounce. The long term bias however remains negative or bearish due to Lower Low in the recent correction wave.
As of this writing, the precious metal is being traded around $1236 an ounce. A support may be seen near $1225, the swing low of the recent dip ahead of $1200, the psychological level and then $1180, the low of 2013.
On the upside, the metal is expected to face a hurdle near $1242, the intraday high of yesterday ahead of $1253, the 23.6% fib level and then $1271, the 38.2% fib level as demonstrated in the above chart. The bias will remain bearish as far as the $1296 resistance area is intact.
The Federal Reserve is scheduled to announce the interest rate decision on Wednesday (Today). According to the median projection of economists surveyed by Bloomberg, the US central bank is likely to keep the benchmark interest rate unchanged at the record low level of 0.25% amid recent growth and inflation outlook.
Asset Purchase Program
Today the US Central Bank will also make the announcement about monthly asset purchase program following the two-day Federal Open Market Committee (FOMC) meeting. According to the average forecast of different economists, the central bank is likely to reduce the monthly asset purchase program by $10 billion to just $15 billion a month. The tapering decision is generally seen as bullish for the US Dollar which consequently spurs bearish momentum in the price of gold.
Considering the overall technical and fundamental outlook, selling the precious metal on a daily close below the $1225 support appears to be a good strategy in short to medium term as explained above.