Gold Up 1.1% Trading At $1,318
Dailyfx | Apr 11, 2014 01:05AM ET
Gold is up 1.1% on the week with the precious metal trading at $1318 ahead of the New York Close on Friday. The rally comes on the back of a substantial sell-off in broader risk assets with US stock indices off by 2-3% across the board. Gold prices have found support on risk-aversion flows and Fed rhetoric after coming off seven week lows at $1277. The advances are likely to remain limited, however as the technical picture keeps the broader focus weighted to the downside.
The release of the minutes from the March FOMC policy meeting noted that several Fed officials said ‘forecasts overstated the rate rise pace,’ suggesting that the central bank does in fact expect to keep rates anchored well after the cessation of QE. Remarks by Philadelphia President Charles Plosser, a voting member this year, further reinforced the central bank’s stance, saying that the ‘dot forecasts are not the FOMC consensus.’
Interest rate expectations were subsequently pushed out, offering support for bullion as the greenback came under tremendous pressure. The Dow Jones FXCM Dollar Index fell to levels not seen since October with a decline of more than 1.2% heading into the close of the week. However, with the US docket picking up next week, the greenback may find some support, limiting the fuel needed to sustain the gold rally.
Traders will be closely eyeing key US data prints next week including retail sales, the consumer price index (CPI), housing data and the release of the Fed’s Beige Book. Inflation data on Tuesday is expected to show a n increase in the pace of year on year price growth to 1.4% from 1.1% with core and m/m inflation expected to hold steady at 1.6% and 0.1% respectively. The updated assessment of the Fed’s twelve districts on Wednesday will likely highlight the week’s docket as investors look for signs that the recovery remains on firm footing.
From a technical standpoint, gold remains at risk below the March opening range low at $1327, with only a move surpassing $1348 shifting our focus back to the topside. This level represents the 61.8% retracement of the decline off the March highs and would require a breach back above the 2012 trendline resistance we broke last month. Bottom line: we’ll be looking for short triggers next week to offer favorable entries targeting objectives into $1270 with only a breach/close above $1327 invalidating our medium-term bias. Such a scenario eyes a break above $1348 to put resistance objectives at $1366, $1383 and $1408 in view. –MB
Get The News You Want
Original post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.