Gold rallied hard on the back of an Intermarket move when the 10-years dumped due to the outcome of the FOMC today.
US 10-years have been trading between the 2.2854% - 2.3354% range; the lower end met as traders discounted a rate hike coming from the Fed with little new information in the FOMC statement and no surprises. Gold, subsequently, rallied from $1,250.01 to $1,256.33 the high and has consolidated in a bullish formation on the five minutes sticks since the announcements.
CME Group FedWatch tool sees virtually no chance of September hike
The DXY is back below the 94 handle again having met a low of 93.664 so far on the day post the FOMC from highs of 94.285. The dollar may still have some downside to go during the following sessions given the less hawkish outlook for interest rates. "The Fed (as of last month) was still indicating it expected to raise interest rates four times over the next 18 months – a total of 1 percentage point. This is in stark contrast to the market which is pricing in barely one 25bp move over the same period," explained analysts at ING. Gold is usually supported by investors who seek to park idle capital in such an environment that appears to be in the making here and $1,265 (18th May high) is back on the map in the near term. $1,243 on the flip side is the 25th July low. $1,274 and $1,280 are the medium term targets for the bulls.
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