ADVFN Logo

We could not find any results for:
Make sure your spelling is correct or try broadening your search.

Trending Now

Toplists

It looks like you aren't logged in.
Click the button below to log in and view your recent history.

Hot Features

Registration Strip Icon for alerts Register for real-time alerts, custom portfolio, and market movers

Gold Holds Key Support Post-Fed, Liquidity Concerns Cushion The Fall

Share On Facebook
share on Linkedin
Print

The zone around $1480 remains key as it could be the difference between a bearish reversal or bullish continuation.

Part of the reason gold has rallied so well this year is due to the markets expectation that the Fed are now on an easing cycle. So, it could be argued that gold is holding up surprisingly well following the Fed’s hawkish cut (relative to market expectations anyway). That said, Powell did go on to say during the press conference that “a more extensive sequence of rate cuts could be appropriate” if the economy does turn down which places them in a holding pattern.

However, perhaps a more pressing concern for investors is the liquidity squeeze in short-term funding. Whilst the Fed took the additional steps of lowering IOER (interest on excess reserves) by 30 bps to 1.8% and repo function rate to 1.7%, the fact they had to intervene is likely unnerving investors and supporting gold prices. Therefore, gold could face headwinds if the Fed convinces markets they have the liquidity squeeze under control, so traders will continue to monitor their repo actions closely this week.

For now, gold is holding above a pivotal support zone around $1480 which comprises of a 50% retracement level, the 50-day MA and structural lows.

  • Bears are likely to take note of the bearish RSI which has been forming since June and the potential head and shoulders top pattern. A bearish pinbar hints at the ‘right shoulder’ and the 20-day MA is capping as resistance. Moreover, yesterday saw an intraday break of the bullish channel.
  • If successful, the target projects an initial target around $1400, and bears could look for a clear break below $1480 to confirm the bearish reversal.
  • If the support zone hold, bulls could look for a break above $1524.24 to invalidate the head and shoulders scenario and assume a bullish continuation.
  • The $1557.10 high becomes the initial target, although we’d be sceptical of too much upside in the current environment; unless liquidity is restored and data improves, we could envisage gold trading in a broader sideways range whilst holding key support.

 

 

City Index: Spread Betting, CFD and Forex Trading on 12,000+ global markets including Indices, Shares, Forex and Bitcoin. Click here to find out more.

 

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

 
Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com