Gold : Ahead Of Fed, What's The Chart Is Saying ?

 For Gold 1040 is a big support zone for now and only sustaining below that expect 1025-1005 area & it has to stay above 1075 for 1100-1191 zone

Trading Levels: Gold (CMP: 1065)

Either Buy above 1075 or wait for dips around 1050-1040;

TGT: 1090-1100*-1140 (1-3M)

TGT: 1165-1191*-1215 (6-12M)

TSL<1025

Note: Consecutive closing below 1025 for any reason, Gold can fall up to 1015-1005* & 984 area in the worst bear case scenario.

As we are approaching the much awaited Fed day tomorrow, market has already discounted "one & off" token rate hike of 0.25% & another 0.25% by April'16  (Dovish hike). Now, its the Fed guidance about future FFR, which will dictate the market.

Considering Fed's ultimate dual mandate of maximum employment (5%) and reasonable inflation (CPI 2%) target, Fed may not employ too much hawkish language in its communication as headline CPI is too far away at 0.5%  (but core CPI is around 2%) and manufacturing data in US is also very tepid.

In 2016, Fed may even take the weapon of  "negative interest rate" as alternative QQE (like in ECB) to stimulate the "real street" in US, if there is no "surprise" on Dec-16 (Hawkish Skip/Hold; it was a close call, but it favours the 1-st hike into 2016, just like in Sep'15 !!)

On the other hand, ECB, BOJ & even PBOC is ready for further QQE in different forms and ready to devalue its currency further to stimulate its economy & export; i,e they are taking divergent policy wrt to Fed.

For the last one year, after QE tapering in US completed and Fed's continuous talks of rate hike (normalization) and verbal intervention, Gold has already corrected by around 20% from early Jan'15 top of around 1306 and over 45% from Sep'11 high of around 1923. As QQE in US, ECB & Japan failed to stimulate the expected inflation in the economy, Gold has also lost its traditional appeal as a "hedge against inflation". 

But, despite that, in the current era of competitive currency devaluation (currency war) by different economies , Gold has an eternal appeal as a "hard asset" against "fragile paper currency" specially in a "doom's day" like situation in global financial market (although chances are very remote).

Technically, Gold may be in the corrective B Wave of the weekly EW cycle and the extended target of the same is near 1040. If this zone of 1040 is respected, then the impulsive C wave target may be near 1098 in the short to mid term.

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