Gold remains supported after Fed defers rate hike

29 July, 2016

Gold remains supported after Fed defers rate hike

In the immediate aftermath of Wednesday’s FOMC statement, in which the Fed held rates steady as expected while still acknowledging improved economic conditions, gold spiked down on the mildly hawkish elements of the statement. Shortly after, however, as the markets digested the Fed’s characteristically non-committal comments that gave no indication as to the potential timing of a future rate hike, the precious metal surged on the continued interest rate uncertainty.

Prior to Wednesday’s surge, the price of gold had been in retreat mode, pulling back from the new two-year high around $1375 that had been reached less than three weeks ago. This pullback was partly due to gold’s diminished safe-haven appeal as equity markets hit new record highs, and also partially driven by anticipation of a more hawkish Fed in the wake of improving US economic data and declining concerns over Brexit.

From a technical perspective, Wednesday’s Fed-driven bounce tentatively preserved gold’s uptrend that has been in place since the end of May. This shorter-term uptrend, which is supported by a clear two-month trend line, lies within the context of a larger parallel uptrend channel that extends back to the $1050-area lows of late last year.

While Thursday saw an initial pullback after Wednesday’s surge, if gold is able to remain above both its noted two-month trend line as well as the key 50-day moving average, the prevailing easing trend of global central banks along with the prolonged hesitation by the Fed to raise interest rates could lead to an extension of the precious metal’s medium-term uptrend. In this event, the price of gold could once again target the noted $1375 high. With any further breakout above that high, the next major upside resistance target is around the $1420 level. In the opposite event of a sustained breakdown below the two-month trend line and 50-day moving average, strong downside support resides at the lower border of the noted parallel uptrend channel.


Source link  
Gold surges to major $1250 resistance as uncertainty prevails

Gold surged Thursday on a breakout of its previous consolidation to hit and slightly exceed major technical resistance at $1250, a level not seen since early November...

Gold remains vulnerable amid hawkish Fed, strong dollar, equity highs

Gold has climbed sharply since the beginning of the year as the US dollar has pulled back from its late-2016 highs and the US Federal Reserve has exercised characteristic restraint in raising interest rates further after the last rate hike in December...

Gold well-supported on safe-haven flows, lagging dollar

Increasing political and economic uncertainties under the new Trump Administration, coupled with a sliding US dollar since the beginning of the year, have led to a sharp rise in gold prices for more than a month...


Gold pressured as dollar and equities remain supported

As the US dollar found some new life on Thursday and US equity markets hovered right around their new all-time highs, gold extended its recent pullback well below the $1200 handle. Since late December, the price of gold had been in a sharp relief rally from its 10-month lows around $1125 support...

Crude oil maintains bullish trend

Oil prices were initially weaker at the start of the new week, but they have now recovered to trade almost flat at the time of this writing. At the weekend, the OPEC and some producers outside of the group met to discuss the progress of their oil production deal...

Trump press conference fails to deter equity bulls

President-Elect Donald Trump spoke on Wednesday morning at his first formal press conference since the November elections, and the markets were all ears. Trump covered a lot of ground with multiple topics that included...


Gold ripe for potential relief rally

The charts tell a clear story of the unrelenting plunge in gold prices since early November. This steep dive has been the result of several related factors, all of which have the potential to extend well into the new year. These largely Trump-driven factors include...

Could EUR/USD finally break 1.05 on this FOMC day?

The market is demanding a rate rise and the Fed better deliver it today, for if it doesn’t the bank’s credibly will be severely damaged. There is really no excuse not to do so. Economic data has been improving, financial markets are calm...

Mixed Jobs Report Keeps High Fed Expectations Intact

As we noted the day before Friday’s US jobs report, only a significantly worse-than-expected reading for November would have likely made the Federal Reserve’s next interest rate decision more difficult...

  


Share: