Gold, XAU/USD, US Dollar, Fed, FOMC, Crude Oil, Fibonacci – Talking Points
- gold Settled again today as U.S. dollar He continued his descent
- The Fed continues to point to more hikes, but Treasury yields are lower
- Wed us CPI May provide some market volatility. XAU up /American dollar?
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The gold price made some gains during the Asian session today as markets digested the Fed’s comments and Treasury yields fell overnight.
The policy hard line included Fed Vice Chair for Supervision Michael Barr, who was joined by Cleveland Fed President Loretta Mester and San Francisco Fed President Mary Daley.
In terms of policy tightening, their remarks oscillated between “we’re close, we’ve got a lot of work to do” and “we’ll probably need to raise interest rates twice.”
Somewhat counterbalance to those comments, Atlanta Fed President Rafael Bostick said the Fed could be patient, acknowledging the bank’s restrictive stance.
Overall, the market seems to be anticipating a weak US CPI number on Wednesday to allay fears of an aggressive stance by the Federal Reserve at the July 26 FOMC meeting.
Treasury yields have retreated from their highest levels seen last week with the benchmark 10-year note falling below 4% after rising from 4.10% through the end of last week.
It appears that the US dollar has been undermined as the Japanese yen continues to make significant gains. USD/JPY traded above 145 at the end of June and is now below 141.
Crude oil was flat during the Asian session, with WTI futures near $73.50 per barrel while Brent crude contract above $78 per barrel.
Asia Pacific stocks were mostly higher with Hong Kong’s Hang Seng Index (HSI) and South Korea’s KOSDAQ leading the way.
China has announced some support for its real estate sector, and that appears to have led to expectations that more stimulus measures may be imminent.
UK jobs data as well as German CPI and ZEW survey may provide some movement in the market. The Reserve Bank of New Zealand will make a cash rate decision tomorrow.
The full economic calendar can be viewed here.
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GC1 (Gold Futures) Technical Analysis
The price of gold seems to be establishing a new range, and has been trading between 1900 and 200 for about two months.
On the downside, support might lie at the Fibonacci retracement levels of the move from 1618 to 2085. The 38.2% retracement level is located at 1907 and the 50% retracement at 1851. The recent decline at 1900 could see some support as well.
On the upside, resistance could be offered in the 1950-1975 area where the 34, 55 and 100 day simple moving averages (SMAs) are located. The top of 200 might offer resistance before a potential resistance area in the 2060-2090 region.
– By Daniel McCarthy, Strategist for DailyFX.com
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