NEW YORK (Kitco News) - Gold trading was quieter ahead of Wednesday afternoon's Federal Open Market Committee (FOMC) monetary policy statement with one senior commodities strategist suggesting the central bank may actually help the metal. Kitco's spot gold was last quoted up $1.30 at $1095.80 an ounce.
Carley Garner, co-founder of DeCarley Trading, said the U.S. Federal Reserve may have a "somewhat positive effect" on the metal. "I think the Fed might actually help out the gold market," she explained from her office in Las Vegas. Traders will comb through tomorrow's statement, seeking clues on the precise timing of the central bank's looming interest rate rise. There will be no press conference from Fed Chair Janet Yellen.
"Obviously gold struggled the last several months...we've been trading in a range," Garner noted. "In our opinion though, all is not lost for the gold bugs and gold bulls," she said in an interview with Kitco News.
Pointing to longer-term charts, Garner said that gold bottoms are historically "messy" and right now, the metal is finding support at the $1,080 level.
"I think it's got a pretty good shot at holding there," she said, adding that one cannot entirely rule out the possibility of gold going down to $1,040 with another selloff. "But, once we finally get all that flush out of the system, I think that we're ready for a rebound," she added.
The trading strategist defined gold as being "notorious" for rocky rides. "It's one of those markets that tend to push to the extremes -- and once it finally gets to a point where everyone is thinking the market is going in one direction, it finally shifts around and goes the other way," Garner said, adding that the market is close to that general consensus.
Garner agreed with the notion that gold is extremely oversold and that it is not a guarantee that things are going to get better. "We've seen some patterns that are developing now that suggest that the odds are probably better than most people think as far as prices reversing and heading higher from here," the chartist said.
Garner also pointed to gold's Relative Strength Index (RSI) and says that in the past decade, it dipped below 30 roughly three or four times, and at each of these occasions, the metal rebounded. "So, either the chart is lying to us, or this could be one of the greatest opportunities for the bulls we've seen in years," she explained.
"There's nothing calm about gold -- I have been doing this a long time and I have seen the ins and outs of the market," Garner said. "This is the type of market that it's a little more emotional than the others so it tends to see quite a bit of volatility at times and I think that's exactly what we're seeing."