Gold bears need validation from 200-SMA on Fed day

Gold refreshes weekly low, taking offers around $1,778 during early Wednesday. The yellow metal justifies a downside break of 100-SMA, suggesting further weakness towards a three-week-old support line near $1,775. However, 200-SMA acts as additional support around $1,770 to challenge bears before the Fed reveals the tapering surprise. Should the Fed matches or surpasses hawkish market hopes, gold’s downside to 23.6% Fibonacci retracement near $1,748 can’t be ruled out.

Alternatively, the 100-SMA level of $1,785 guards the immediate upside of the commodity, a break of which will direct buyers to the weekly peak near $1,796. In a case where the gold bulls keep reins past $1,796, the $1,800 threshold and 78.6% Fibonacci retracement level close to $1,810 will be in focus. Overall, gold sellers are in the driver’s seat before the likely bearish event for the metal.