Main takeaway 

It's amazing what happens to risk markets when the Feds stop sprinkling monetary policy fairy dust on it.!

Fedspeak backlash

Investors are not in the least bit enamoured by Fed speak overnight as they were hoping for a bigger bang for their investment buck that the Feds would slash the fund's rates by 50 bp July. 

With Powell and Bullard walking down some of the posts FOMC dovish views, Asia risk markets are having a bit of conniption fit but none more so than Gold, which is carrying the moniker as the pain trade of the day after selling off to just below $1405.

 I can't help but think Gold prices will trading very much inversely correlated to the USD for the then next few days, but more short-term pain will come if the Euro falls below the 200dma 1.1346 which could trigger a more significant Gold flush.

Core Gold View

I remain bullish Gold and continue to remind myself that when playing, risk markets if there is no pain, there is no gain as corrections are part of the process. 

We’re in the early stages of US weaker dollar policy (I think), the US-China trade war will morph into a cold war, interest rates most assuredly stay lower for longer, and the never-ending middle east saga endures. So, the gold rally is supported by some dominant narrative.


There has been a slight picking up in hedging against a protracted trade war risk most convex and liquid instruments. The markets are not flashing red, but there is a zero impulse to buy, suggesting G-20 is clearly on the market's mind.

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Editors’ Picks

EUR/USD remains depressed but off daily lows

The EUR/USD pair is recovering from a daily low of 1.1216, although holding in negative territory for the day. US preliminary Michigan Consumer Sentiment Index improved by less-than-anticipated in July, coming in at 98.4 vs. the 98.5 expected.


GBP/USD trading marginally lower daily basis but above 1.2500

The Pound gave back some of its Thursday’s gain on dollar’s relief. The GBP/USD pair broke a daily descendant trend line coming from June’s high and holds above it, leaving little room for sellers to act.


USD/JPY: bears pausing, still in control

Japanese National Inflation steady at 0.7%YoY in June. US Michigan Consumer Sentiment Index expected at 98.5 in July. USD/JPY corrective advance falling short of signaling an interim bottom in place.


Something has spooked the Fed

We wish we knew what it is. Wild talk of the US joining Japan and Europe with zero or negative return on the 10-year is or should be very frightening.

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Gold consolidates around $ 1440, eyes US data for fresh direction

Gold (futures on Comex) extends its side-trend around the 1440 mark into the mid-European session, having stalled its retreat from 2019 highs of 1454 near 1437 region.

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