Gold inches higher as Fed Rate Hike Hopes Diminish

goldThe price of spot gold (XAU/USD) continues to inch higher as investor hopes for another Federal Reserve rate hike diminish. This has sent the US dollar lower along with front end

Treasury bond yields. This boosted the appeal of non interest bearing or anti fiat assets, like gold. Fed Funds index swaps are now pricing in the probability of another hike before year end at 42.3 percent. This has fallen from 49.1 percent, seen last week. Gold traders are also seeing a further unwinding of the “Trump trade.”

This week there is not a lot on the economic calendar that will have a big impact on the yellow metal. Not much is seen that will impact event risk with global yield trends. This means that a new consolidation period for the yellow metal is likely. Monetary policy announcements from the Bank of Japan and the European Central Bank are the next big event risks. Those will have to wait until Thursday. News out of the States and its capitol, Washington DC remains an ever present source of volatility.

Gold Technical Analysis

The price of the bullion has now risen for three straight days. It has breached the resistance level that lines up at $1,239.60 per ounce. The next level of technical resistance lines up at 1,250.40. A daily close above this technical upside barrier, challenges the technical resistance at 1,261.20.

The alternative technical analysis, notes a former resistance layer recast as the first downside barrier. This layer of support lines up at $1,239.60 per ounce. The next downside layer lines up at 1,226.25.

David Frank

David Frank

Chief Market Strategist at CupO'Forex
David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.
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