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Gold Bears Take Back The Baton

gold Bears Take Back The Baton

Gold Bears Take Back The Baton Post FOMC and Powell’s Bullishness

Gold dropped following the FOMC presser from which Powell rescued the dollar with an upbeat assessment of the US economy delivered to reporters who scrutinised the U.S. recovery. 

Gold has tested the familiar lows of 1273 again on the rise in the greenback and bears are set a technical break to the downside. 

The FOMC stole the limelight today and the poor data from the US has been forgotten as Powell brushed it off when reports questioned his outlook considering the negative implications it (US manufacturing PMI) could have for the economy on a forward time scale. Instead, much like the FOMC statement, the governor of the Federal Reserve stuck to his mantra that, “Our baseline view remains that with a strong job market and continued growth, inflation will return to 2% over time.

FOMC Statement 

Here is the new statement which remains basically consistent with the Fed’s script:

“Information received since the Federal Open Market Committee met in March indicates that the labor market remains strong and that economic activity rose at a solid rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Growth of household spending and business fixed investment slowed in the first quarter. On a 12-month basis, overall inflation and inflation for items other than food and energy have declined and are running below 2 percent. On balance, market-based measures of inflation compensation have remained low in recent months, and survey-based measures of longer-term inflation expectations are little

changed.”

As for Gold, the precious metal is back testing a key support area having dropped out of the rising interim channel and the case is building up for a continuation of a southerly trajectory within the descending wedge. Below the 38.2% Fibo, 1275 and 1266, prospects switch back to the 200-D EMA and confluence area of the 50% retracement target of 1250/1253 respectively.

Article by FXStreet

Gold Plummets Below $1300

Gold Plummets Below $1300 Mark, Hits 3-Day Lows On Stronger USD

Gold extended its sharp pullback from two-week lows and tumbled below the key $1300 psychological mark during the early North-American session.

The precious metal failed to capitalize on the recent positive momentum and started correcting from the $1310-11 supply zone, the highest level since March 28 touched amid firming expectations that the Fed will hold interest rates steady at least through the end of the year. 

With investors looking past the latest FOMC meeting minutes, a goodish pickup in the US Dollar demand turned out to be one of the key factors prompting some aggressive long-unwinding/fresh selling around the dollar-denominated commodity.

The downward momentum accelerated further following the release of upbeat US economic data, showing that initial weekly jobless claims unexpectedly dropped during the week ending April 6 and sank below 200k for the first time since 1969.

Separately, March’s PPI rose 0.6% m/m in March, which coupled with a solid bounce in the US Treasury bond yields exerted some additional downward pressure on the non-yielding yellow metal and took along some short-term trading stops placed near the $1300 mark.

The bearish pressure, however, eased a bit, helping the commodity to bounce off session lows, around the $1295-94 region, following some fresh dovish comments by St. Louis Fed President James Bullard, saying that March FOMC marked the end of policy normalization.

It, however, remains to be seen if bulls are able to find any meaningful respite or the current downfall marks the resumption of the recent downward trajectory amid fading safe-haven demand on the back of positive mood around equity markets and a bearish technical set-up on the daily charts.

Article by FXStreet

Gold Bulls Concentrate on Geopolitics

gold bulls concentrate on geopolitics

Gold on the bids around $1300 as bulls concentrate more on geopolitics

The news reports signaling the US-EU trade rift and likely renewed geopolitical tensions between the US and Saudi Arabia triggered risk-off.Buyers target 50-day SMA during further upside.

Gold prices are taking the rounds near $1299 early on Tuesday as investors give more emphasis to the latest news reports signaling an increase in global geopolitical tension.

The yellow metal rose to a two-week high on Monday as hostilities in Libya and the US President’s another hit to Iran grabbed market attention. Headlines concerning the Libyan National Army’s march to acquire the capital Tripoli and Donald Trump declaring Iran’s revolutionary guard as a terrorist organization helped the Gold to remain strong yesterday.

During early Tuesday, investors welcomed the development from the UK that favored an amendment rejecting no-deal Brexit.

However, the optimism couldn’t last long after the Financial Times reported that the US is proposing tariffs worth $11 billion on the EU products, including the Airbus.

The risk-off sentiment got additional support when the Trump administration announced a ban on 16 Saudi nationals from entering the U.S. due to their roles in the murder of journalist Jamal Khashoggi. Saudi Arabia is still to respond to the ban and may generate news reports during the day.

Yields on the US 10-year note remained unchanged near 2.519%.

Investors may now concentrate more on the qualitative catalysts like Brexit and the geopolitical plays including the US.

Gold Technical Analysis

Even if 23.6% Fibonacci retracement of August 2018 to February 2019 upside, at $1303, can limit gold’s immediate advances, 50-day simple moving average (SMA) near $1307/08 and seven-week-old descending trend-line at $1315 could question the bullion buyers then after.

Alternatively, $1293 and 100-day SMA level of $1283 can provide immediate supports to the safe-haven ahead of highlighting 38.2% Fibonacci retracement around $1276.

Article by FXStreet