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Gold intermarket: mixed on risk-on stocks, lower 10-years post FOMC minutes

Gold has been doing what DXY tells it to do in recent sessions and today is no different.

DXY picked up from below the 97 handle on the 22nd May and Gold sold off from the 1,263 territories down to the 1,248 area in a resurgence of the greenback. US yields were the driver of the dollar's comeback when they rallied from 2.2243% 17th May lows and onto the 23rd 2.2799% highs, pulling gold lower from aforementioned highs. This all tied in with the Trump administration's announcements for fiscal policy and potential tax breaks after a spell of concerning politics from the White House during the Comey news. That risk had propelled gold to the 1,265 territories when coupled with the recent misses in key US data. 

Today's FOMC minutes were not offering any hawkish surprises of medium term guidance in terms of interest rates and thus the dollar came under pressure.

FOMC minutes: Fed policymakers agreed that details of balance sheet plan should be announced soon

More from the minutes:

  • Nearly all fed policymakers expressed a favourable view of the staff proposal as a way to reduce central bank holdings in a gradual and predictable manner 
  • Fed policymakers agreed that details of balance sheet plan should be announced soon, with start of reductions appropriate this year 
  • Most fed officials viewed recent soft inflation as "transitory," though a few raised concerns that progress toward the central bank's 2 percent target had slowed 
  • In general, fed officials said their assessment of the economy had changed little since the march policy meeting, with the labour market continuing to improve and risks from the global economy receding 
  • Fed officials said they expected a rebound in consumer spending in coming months in light of solid economic fundamentals 
  • Fed officials said they saw near-term risks to the economic outlook as roughly balanced, though several noted global geopolitical uncertainty and possible emerging market strains as u.s. rates rise 

Gold bulls are gaining traction after a choppy number of sessions between 1,245 and 1,263 areas. The recent highs of 1,258.30 broke the 20 hourly and 4-hourly smas, a bullish signal, and bulls can now target the 1,260 psychological level again. Markets will be monitoring a break-down in the 10-years back towards the session lows of 2.5190. However, while Wall Street catches a bid from the minutes, gold is more governed by improved risk appetite and caps the rally. 

Author

Ross J Burland

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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