The gold is still trying to add to its recent gains which pushed it up trading above $1700 psychological level after it could easily get over it following the Fed's decision to keep the target range for the federal funds rate at 0 to 1/4 percent anticipating that the current economic conditions including low rates of resource utilization and a subdued outlook for inflation over the medium run are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.
The decision was not widely expected by the Fed after the market has seen recently improving of the US economic performance especially in the labor market with the falling of the unemployment rate to 8.5% in December which is the lowest since Feb 2009.
The Fed's economic assessment has shown its current expectation of having longer time than the markets were pricing for reaching the economic stability which can warrant a rate hike increasing the probability of having more easing measures with the inflation slowing down and this was one of the reasons which was weighing down on the gold prices as a hedge against inflation but after this assessment, the market can wait now for easing movement by the Fed accompanied with the inflation upside risks easing in US.
As we have seen recently constant falling of US CPI to reach 3% yearly in December from 3.4% in November from 3.5% in October after reaching 3.9% in last September which is its highest level since September 2008 suggesting that there can be deflation pressure again to face the US economy which lead the Fed before to take the QE2 decision in the beginning of November 2010 for fighting it and stimulating the economy putting pressure on the cost of borrowing.
God willing, the gold can face now resistance again $1762 and breaking it can open the way for another resistance at $1802 which can be followed by resisting levels above it at 1827, 1844, 1885 before its highest level at $1920 which has been reached on 6th of last September while the way down can meet supporting levels now at $1648, $1627, $1592 before $1523 which could contain its falling from $1920 driving it up to reach these current levels.


Kind Regards
FX Market Strategist
Walid Salah El din
E-mail: mail@fx-recommends.com