Gold Intraday: Back in Consolidation Range as Fed Reaffirms Commitment
George Lam June 11, 2020 3:00 AM
Yesterday, spot gold posted the largest daily gains since May 7 as Fed reaffirmed commitment to low interest rates and QE...
Spot gold jumped 1.2% on day to $1,735 yesterday, the largest daily gains since May 7. The U.S. Federal Reserve officials' median forecast showed that Fed Funds Rate is expected to remain at current level through 2022.
Chairman Jerome Powell said they are "not even thinking about raising rates" and "are strongly committed" to using their tools. He played down the surprising growth in May nonfarm payrolls, pointed out that there will be a significant chunk, where people do not get back to their old jobs and the labour market would take time to recover.
From a technical point of view, spot gold has broken above a bearish channel drawn from May 18 as shown on the 1-hour chart. The longer-term consolidation range is still valid after the recent rebound. Despite possible sideways drifts within the range, the level at $1,714 might be considered as the nearest support level (around the mid-point of the range), while the 1st and 2nd resistances are likely to be located at $1,745 and $1,765 respectively. Alternatively, a break below $1,714 may open a path to the next support at $1,696.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.