Gold has made some solid gains over the past few weeks as the market begins to doubt if we will see a rate rise from the Fed this year. A break through of a solid resistance level, and a pull back to it signals the market is looking to take gold through the recent four month high.

Gold has seen plenty of demand thanks to a series of mixed economic data sets that have many market participants questioning whether the Fed will be able to justify a rate rise in 2015. Last week the poor US core retail sales figures at -0.3% m/m (0.1% prev) highlights the uncertainty in the US consumer sector, which generally underpins the US economy. At the same time the PPI result was released and added to the upward pressure on gold as it came in at -0.5% m/m, down from 0.0%.

Earlier this month we heard from Federal Reserve Vice Chairman Stanley Fischer whose rhetoric is slightly changing when it comes to interest rates. His stance is now that a rate rise in 2015 is an “expectation, not a commitment”. In other words, the Fed would like to raise rates but does not have the data to do so. The market agrees and Gold has been bid higher on expectation of lower interest rates for longer.

Mr Fischer also pointed to weakness in the labour market, noting that real wage growth remains subdued and hiring has slowed over the past two months. Certainly the issue of low inflation is causing headaches for the Fed, but to the benefit of the Gold price. The Fed meeting on 27th October will be one to watch, with at least one FOMC member suggesting this was still a “live” meeting and that a hike was “possible”. That being said, it will be difficult for the Fed to justify a hike in October, if they could not hike in September, so expect more of the same.

XAUUSD

The daily chart for Gold shows clearly the turnaround in sentiment. For the first time since January, the 100 day MA has turned positive, and a cross of the 20 MA over it certainly signals to the market the direction of the sentiment. The key level of indication is the now support at $1168.37. This is a level that has acted as a swing point several times in the past and was clearly a point of interest in the recent bullish leg.

This week, the price has pulled back to it and used it as support, which the bulls defended with ease. That signals another bullish leg is ready to begin which will see the recent four month high at $1191.44 come under pressure. The RSI edged up close to the oversold level, however the recent pull back ensures there is still enough upside potential in the RSI for any test of the highs.

Any leg higher will look for resistance at the recent high at $1191.56 with further resistance at $1205.05 and $1215.25. If the support at 1168.37 fails, look for the next levels of support at $1155.11 and $1139.44.

Forex and CFDs are leveraged financial instruments. Trading on such leveraged products carries a high level of risk and may not be suitable for all investors. Please ensure that you read and fully understand the Risk Disclosure Policy before entering any transaction with Blackwell Global Investments Limited.

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD holds above 0.6500 in thin trading

AUD/USD holds above 0.6500 in thin trading

The Australian Dollar managed to recover ground against its American rival after AUD/USD fell to 0.6484. The upbeat tone of Wall Street underpinned the Aussie despite broad US Dollar strength and tepid Australian data.

AUD/USD News

EUR/USD comfortable below 1.0800 lower lows at sight

EUR/USD comfortable below 1.0800 lower lows at sight

The EUR/USD pair lost ground on Thursday and settled near a fresh March low of 1.0774. Strong US data and hawkish Fed speakers comments lead the way ahead of the release of the US PCE Price Index on Friday.

EUR/USD News

Gold price finishes Thursday’s session set to reach new all-time highs

Gold price finishes Thursday’s session set to reach new all-time highs

Gold price rallied during the North American session on Thursday and hit a new all-time high of $2,225 in the mid-North American session. Precious metal prices are trending higher even though US Treasury yields are advancing, underpinning the Greenback.

Gold News

Bitcoin price extends retreat from $69K as old whales shift their holdings to new whales

Bitcoin price extends retreat from $69K as old whales shift their holdings to new whales

Bitcoin price continues to move further away from the $69,000 threshold, gaining ground as BTC bulls hope for a retest of the $73,777 peak. This is because of the general assumption that clearing this blockade would set the tone for a reach higher, marking a new all-time high.

Read more

Bears have been standing before a steamroller so far this year

Bears have been standing before a steamroller so far this year

Despite a pushback on rate cuts from Christopher Waller, and what was supposed to be cautious trading sentiment ahead of critical US inflation data released later on Friday, the S&P 500 rose on Thursday, marking its best first-quarter performance in five years.

Read more

Majors

Cryptocurrencies

Signatures