Gold digesting FOMC-led strong gains

Gold was seen digesting Wednesday's strong gains, back above 20-day SMA, and traded in a narrow band with mild negative bias around $1333 level. 

On Wednesday, the yellow metal recorded third consecutive day of advances, primarily led by US Dollar sell-off after the Federal Reserve left interest rates unchanged, albeit signaled that a rate-hike was still likely before the end of this year. A weaker greenback is seen as supportive for dollar-denominated commodities - like gold. 

Wednesday's move helped the precious metal to erase all of its previous week's losses and jump to a 2-week high. Hence, a follow through buying interest above $1335 would open room for further appreciation for the metal in the near-term.

Technical outlook

Carol Harmer, founder at charmertradingacademy.com, notes, "Gold is extremely interesting at the moment. We have tested weekly support down at 1310/08 a number of times and we can see from the weekly chart that we have been making a continuation pattern since july. Now this pattern can carry on within the defined range of 1310 to 1345 for another couple of weeks. However no more than 2. Then I would expect a break higher."

She further adds, "There are 2 ways of measuring the projected target. And the break point is at 1352. So if we trade above 1355 we can be clear that the market is now going to trade higher. The initial measured target of this pattern is 1478. This would be as we see a minimum target. We take the measurement from the upper trendline evident in this pattern and we see 1527 as the targeted area."