Gold intermarket: VIX rallies, but gold consolidates ahead of BOJ/FOMC

Gold is within a consolidation phase while markets can't make up their minds as to what is in store for us for the rest of the year. The VIX has been through the roof while the DXY manages to pick up the pace on the 95 handle.

Gold at $1,326 was the high today and has taken a bearish turn to $1,324, albeit without any follow through and remains within the confines of the wider range of $1,327 and $1,322, down from $1,332 recent highs. The price is below the bearish moving averages on the hourly chart although, significantly, the heightened volatility should keep the broader 2016 bullish tone underpinned with $1,375 as key upside target.

However, the BoJ are this month and will be a major risk event that could support the DXY should Kuroda pull out all the stops and surprise markets with further easing while the skeptics have been mounting up of late, arguing that the BoJ has run out of options. USD/JPY is currently trading around the 102 handle, but a break to the 100 sma at 104.00 could weaken the price of gold and considerably, pressuring the $1,300 level with a relief rally in risk. On the flip side, we also have the FOMC this month and more dovishness could weaken the DXY and support gold higher to aforementioned recent highs and beyond for new 2016 highs targeting 2013 $1,433 July highs.