Gold was settling below $1,300 in Thursday's NY session and for the first time in September and suffered the biggest one-day percentage drop since early July after the U.S. Federal Reserve's hawkish dot plot announcements for between now and the end of 2018.
Spot gold dropped from $1,296 spot resistance to a low of $1,288 in the NY session before collecting a bid back to $1,295 and back to range between in early Asia $1,290/002.
Overall, from the moment the FOMC's statement was digested, the percentage decline in Gold has not been as wide as this since early July.
With both the N.Korean tensions and lower for longer Fed priced out of the equation, Gold is set for a gloomy rest of the year so long as markets continue to ignore the "verbal warfare" between Trump and his Northern Korean counterpart Kim Jong-un. However, should the market be let down by the Fed this year, potentially due to unforeseen circumstances/events that could stall the Fed from hiking as early as December, the dollar correlation to gold should be a supportive factor going forward.
FOMC reviewed: weakness in inflation may not be entirely transitory - Nomura
"The median core PCE inflation forecast was lowered by 0.1 pp in 2017, likely reflecting recent weak inflation data. Further, the median forecasts of overall PCE inflation and core PCE inflation for 2018 also fell by 0.1pp, likely reflecting the views that some of the weakness in inflation may not be entirely transitory. More importantly, the median of inflation forecasts for the longer run and for 2019 were unchanged at 2.0%," explained analysts at Nomura.
Gold levels
Technically, gold is well into bearish territory. It has been trading below the rising channel's trend support line, (23.6 Fibo), around 1323 which seems way over the horizon now that spot is below the psychological 1,300 level. The precious metal has closed for the first time below the 38.2% Fibo level of the rise measured between 1204.81 to 1357.53 at 1299.20. 1295 support was weak (previous double to ), but 1281.17 remains intact with the lows to 1288 holding. Gold needs to get back above the double top highs, 1,334 zone to break free of the bear's grip.
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