During the week, both the gold price and the 10yr T-Note price continued to consolidate within their respective patterns as shown in Figure 1 & 2. Price targets and our bullish perspective as discussed in last week’s report continue to hold.
We expect the consolidation will continue until the next major catalyst event which is the FOMC announcement on May 3. Market based probabilities currently suggest that the FED will hike the Fed Fund Rate by an additional 25bp to the range of 5.00% to 5.25% and that this will be the last rate-hike of the cycle. Commentary in the FED’s accompanying statement may solidify the later point which could very well catalyze both the gold price and 10yr T-Note price break higher.
During the prior interest rate cycle in 2019, the gold price was at the upper-edge of its consolidation range going into the June 19, 2019 FOMC announcement as shown in Figure 3. Following this meeting, the gold price broke-out and entered its transition-phase towards the next consolidation level.
Today we find the gold price similarly perched at the upper-edge of its consolidation range with an important FOMC meeting thirteen trading days away. Like in June 2019, this meeting could very well be the event that catalyzes gold’s breakout move higher.