Gold rally fades slightly amid Fed speeches

Gold prices trading inversely to Fed rate hike expectations

Gold prices trading inversely to Fed rate hike expectations

Gold

  • Gold prices trading inversely  Gold is trading at $1339.60 per ounce at 09:40 GMT this morning, 0.18% lower from the New York close.
  •  This morning, the precious metal traded at a high of $1343.60 per ounce and a low of $1338.50 per ounce. Yesterday, gold traded 0.61% lower in the New York session and closed at $1342.00 per ounce,
  • amid strength in the greenback and the ECB’s decision to keep the monetary policy unchanged. Immediate downside, the first support level is seen at $1334.30 per ounce, while on the upside, the first resistance level is at $1349.10 per ounce.

Gold prices trading inversely test channel resistance, but don’t break higher

Gold prices trading inversely to Fed rate hike expectations

Gold prices trading inversely Fed rate hike expectations are essentially unchanged from before last week’s weaker than expected jobs report to now. This is an interesting development because once last Friday’s Non-Farm Payroll report was released, gold prices began to rally. Gold price rallied because the expectations for a rate hike began to soften.

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Since then, rate hike expectations began to increase again and are back up to similar levels as last week. This is important because lately gold prices tend to move inversely with rate hike expectations. If there is an expectation for increased rates, then traders will seek out other assets which produce a yield. If rates are expected to remain low, then gold appears more attractive since it doesn’t deliver a yield.

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Taking a look into the technical picture for gold prices, the failure to break above the orange resistance line is something to keep an eye on. The move lower since July 6, 2016 appears to be a correction that would likely become fully retraced to the upside. However, was the failure at the resistance line simply a pause to gather energy to break higher?

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Looking at the intraday internals, support levels loom near $1320. If we see a bounce higher near this level that breaks above the orange resistance line, then bulls can get excited for a potential move towards $1375 or $1435.

 

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