Pre Fed Dollar weakness sends Gold towards $3.700, bulls eyeing $3.750

Gold is trading with unrivalled bullish momentum supported by price stability above local demand zone $3675 as pre Fed rally reached $3697, just $3 away from psychological barrier $3700

Markets remain cautious ahead of tomorrow's interest rate decision by Federal Reserve which widely expected to cut rates by 25 BPS as a base case.

Dollar Index has already priced in the impact as the basket of major currencies reaches 97 low.

Fundamental Drivers:

• Tomorrow's Fed rate decision.
• Dollar Index plunges below 97
• Central Banks step up Gold purchases.
• Record ETF inflow of Gold
• Geo political situation remains fragile.
• 10 Year Bond Yields remain elevated, a dip in yields and further weakness in Dollar will boost Gold.
• Markets will closely monitor Fed's commentary for any dovish signals.

Technical Drivers:

.Gold prices maintain strong bullish uptrend supported by price stability above horizontal demand zone $3675.

.RSI on Daily time frame sits at 80 signalling strength in uptrend while 4 hour RSI reading at 74 indicates room for further gains though monthly time frame RSI at 88 is extremely overbought which may cause a substantial price correction ahead after rate cut impact is digested.

Potential Support & Resistance and possible scenario:

Gold is trading on All Time High around $3698 which is very close to psychological mark $3700 as Dollar Index has broken below 97.

Immediate hurdle sits at $3700-$3705 above which next resistance is positioned at $3722 followed by $3735 and $3758 while major bullish extension may target next leg higher at $3780.

As reflected by Daily time frame price action and candle structure, Gold rally has left enough liquidity and profit booking on heights is a high probability which may cause a price correction towards major support levels before resuming next major bullish impulse wave.

Break below immediate support $3675 will expose next support $3663 followed by $3655-$3645 below which 4 hourly 50 EMA sits at $3620.