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Breaking news

Federal Reserve Leaves Interest Rates Unchanged, Maintains Monthly Asset Purchases

Real Time News
  • The July FOMC press conference is hammering home this point: the labor market mandate is now on equal footing with the inflation mandate (which is atypical); and Powell is now making the case that the labor mandate is *more important* to normalization than the inflation side. https://t.co/saAmTwpTRw
  • Fed's Powell: - Fed has not made a decision on when taper will commence - Variety of opinions with in the Committee on when tapering should begin
  • Fed's Powell: - Transitory means not impacting longer-run inflation patterns - We must be extremely careful when it comes to the inflation mandate
  • Fed's Powell: - Fear of COVID and unemployment benefits are keeping people from working - Such a high vacancy-to-unemployed ratio is rare
  • Fed's Powell: - We are not looking at raising rates, but instead asset purchases - Ideally you would not be raising rates before tapering
  • @CVecchioFX @RiskReversal @GuyAdami Gold is headed back to the bar for another bender #LowerForLonger
  • Fed's Powell: - Move in yields not pinned on one single factor - Technical factors, movements in real yields shifting bond market
  • Fed's Powell: - In the near-term, risks to inflation are tilted to the upside - If inflation continues to rise above the Committee's goal, Fed will use its tools to guide inflation lower
  • $USD bearish break, now at LOD next support 92.19-92.26 https://t.co/KE2gP6Q1Xs https://t.co/DmMGL9byme
  • Gold and the US Dollar whipsawing in wake of the Fed statement and press conference hosted by Chair Powell. Statement said the economy has made progress toward its goals, but Powell just expounded on this by saying "we are still a ways away from *substantial* progress on jobs." https://t.co/qVy8rpIn86
Gold Price Outlook: Recovery from 2019 Low Faces Critical Test

Gold Price Outlook: Recovery from 2019 Low Faces Critical Test

Justin McQueen, Analyst

Gold Price Analysis and Talking Points:

  • Gold Prices Bounce Back as Investors Seek Safe Havens
  • Gold Technical Analysis | Recovery Faces First Test
  • Plethora of US data May Dictate Gold

See our quarterly gold forecast to learn what will drive prices throughout Q2!

Gold Prices Bounce Back as Investors Seek Safe Havens

Despite the topside breakout in the USD index, gold prices have managed to stage a slight recovery from its 2019 lows, refraining from making a test of the 200DMA situated at 1250. The slight rebound had stemmed from increased signs of weaker global growth with the likes of South Korea (bellwether for global trade & tech) reported the largest contraction in GDP since the financial crisis (full story), while Germany has also showed little signs of a recovery (full story), which in turn has seen global bond yields drop. Consequently, gold is set to have its first weekly gain in a month.

Gold Technical Analysis | Recovery Faces First Test

Gold prices are set to face its first test with the precious metal edging towards prior trendline support, which is now resistance at $1284, while the 61.8% Fibonacci retracement (2018 peak to 2018 low) at $1287 could also curb further advances. As such, failure to make a decisive break above could see a retest of the 2019 low ($1266) before the 50% Fibo ($1262).

Plethora of US data May Dictate Gold

From here on till next week, there will be a plethora of tier 1 macro data out of the US, which could dictate price action in Gold with US Q1 GDP released today while the FOMC and NFP report will be digested next week.

GOLD PRICE CHART: Daily Time-Frame (Mar 2018-April 2019)

Gold Price Outlook: Recovery from 2019 Low Faces Critical Test

What You Need to Know About the Gold Market

GOLD TRADING RESOURCES:

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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