Buy the Fact: Gold jumps after Fed rate hike
|- Gold spikes after Fed rate hike.
- Buy the fact trade underway.
- Treasury yields drop, markets ignore upward revision of GDP forecast.
Gold (XAU/USD) jumped to a one-week high of $1255.44 after the Fed hiked rates by 25 basis points as expected and kept the interest rate dot plot unchanged.
The central bank sees the rate hikes in 2018 and two rate hikes in 2019. The 25 bps hike was largely priced-in, which is evident from the drop in gold from $1300 to $1243 levels in the last two weeks. Hence, the bid tone around the yellow metal strengthened on 'buy the fact' trade post-Fed rate hike.
As of writing, gold is trading at $1252.00 levels. The 10-year treasury yield is down 3.4 basis points at 2.369 percent, while the dollar index is down 0.4 percent at 93.65 levels.
It remains to be seen if the yellow metal is able to hold on to the post-Fed gains, given the central bank sees higher growth and lower jobless rate in 2018. The Fed now sees the economy expanding 2.5 percent in 2018 as compared to the previous forecast of 2.1 percent.
Gold Technical Levels
A move above $1256.29 (10-day MA) would expose resistance at $1260 (Oct. 6 low) and $1263.78 (Oct. 27 low).On the downside, a move below $1251.58 (Monday's high) could yield a pullback to $$1240.70 (Monday's low) and $1236.50 (yesterday's doji candle).
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