(Kitco News) – Gold is still finding buyers on the dips after Wednesday afternoon’s Fed rate cut, and the technical picture remains supportive despite this week’s central-bank-driven volatility, according to Christopher Lewis, market analyst at FX Empire.
“The gold market gapped at the open to the downside on Thursday, as we have seen a little bit of profit taking,” Lewis said. “I think we’ve got a situation where the market has been very bullish for some time. And therefore, I think a little bit of a pullback was probably necessary.”
“The Federal Reserve meeting has come and gone, and it initially looked like the Federal Reserve might be tighter than people thought, or at least more hawkish,” he added. “But now it looks like the markets are starting to readjust. And as per usual, the first move the market makes after the Federal Reserve decision might end up being the wrong one.”
Lewis noted that gold remains in a massive longer-term uptrend. “I think ultimately any pullback at this point in time still ends up being a buying opportunity, with the $3,650 level offering support right along with the $3,600 level,” he wrote. “To the upside, the $3,800 level is a potential target based on the measured move of the ascending triangle that we broke out of, but we’ll just have to wait and see how long it takes to get there.”
“I’ve got no interest in shorting gold,” Lewis said. “It’s been bullish for far too long. And of course, with central banks, mainly the Federal Reserve, out there cutting rates, it does help the idea of gold going higher. Not to mention the fact that central banks around the world have been hoarding gold and the geopolitical situation out there continues to be pretty noisy. And that does tend to help gold as well.”
Gold is coming off the session low of $3,630 set 15 minutes after the North American open.
Spot gold last traded at $3,640.25 for a loss of 0.53% on the daily chart.
