Gold Price Analysis: Despite Powell's bombshell gold is still higher on the day

Fundamental backdrop

Today has been another bumper session with lots of news. The comments from Fed Chair Powell were the main event. As expected, Powell confirmed that the Fed is not "looking at" negative rates at the moment. He went on to say that the evidence on negative rates is very mixed and concern over them is interrupting intermediation. The futures markets have reduced their bets on negative rates but there is still the suggestion that they will need to reassess the situation if there is a second wave of the virus. 

That was not the end of the central banks' speaks today as ECB's de Guindos said the Eurozone has already reached its lowest level in terms of economic activity. Slightly presumptuous as once again I am not sure he could forecast the second wave of infection and if the virus could mutate to something more serious. He added that it will take up to two years to the EU to fully recover and get back to the situation previous to the current shock.

In Washington, Trump was on the offensive once again extending the executive order aimed at Huawei and ZTE (Chinese companies). Elsewhere, Washington also extended its stay at home order through to June 8th. 

Equities have not reacted well to events in the session, with all of the major indices down over 2%. The DAX is also down over 2.5% on the session. 

Technical picture

The trendline on the 4-hour chart below is a thing of beauty. The technical levels are often well respected in the yellow metal. The market is stuck between a rock and a hard place on Wednesday. The USD strength has outweighed the bearishness in stocks and gold is in full consolidation mode for now. It will be interesting when the USD starts to weaken. If gold breaks the pattern at that stage, it will tell us lots about the positioning. 

Additional levels