Gold, capped on $1,280 post FOMC, bears take back control, eyes on $1,258/Yellen presser
|Gold was testing $1,280 on the announcements from the FOMC and statement but has since dropped back to test the 1hr 20 sma at 1270.60 as the dollar picks up a bid.
Fed raises rates by 25 bps; second hike of 2017
The Fed hiked as expected and the statement was not as dovish as markets had been speculating. There were very few changes to statement in regards to inflation:
"On a 12-month basis, inflation has declined recently and, like the measure excluding food and energy prices, is running somewhat below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.... Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee's 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely."
All in all, that is "somewhat" similar to the last statement and the Fed do not seem too concerned about inflation hitting their medium-term target, The fact that they have indicated another hike in 2017 props up the dollar and send the 10-year benchmark higher from the lows 2.1019% to current 2.1290%.
All eyes are now on the presser for next catalyst. For Gold now, a sell-off to the downside and a break of $1,258 recent lows opens $1,246 9th April low.
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