Gold hugging the flat line after a 2nd consecutive up day; technicians still calling for more downside

FXstreet.com (Barcelona) - Gold is lifting still as the DXY levitates despite higher Treasury yields. Wednesday’s FOMC announcement on their tapering program looms large for traders in all asset classes.

Gold will rip higher if the tapering is pushed off / cascade lower if tapering starts now

The playbook for gold appears pretty clear this week – sell on tapering / buy on no-tapering. Bond yields are still in technically strong territory – so it would seem that the bond traders are pricing in at least a modest amount of tapering of Fed bond purchases. If that is the way it is announced this week, gold may be in trouble.

Technical outlook for gold

Technicians say that if the bearish scenario plays out that the ultimate downside target for gold is 1,065. However, gold would likely see some buying interest at the 12/6 low at 1210.10, the 6/28 low of 1179.80 and the Fibonacci projection of 1172. Resistance comes in at the Fibonacci projection for a possible “abc” upside correction at 1268.30. Above that, the 11/14 high of 1293.90 comes into play.