- Gold prices soared on the back of a dovish take on the Fed.
- Gold is currently trading at $1,320/oz as Powell takes questions in the presser.
Gold has shot up from $1,310 to a high of $1,321 on the back of widely expected tweaks to the statement that underscores the patience towards monetary policy at the Fed and vigilance towards domestic data and the global economy. However, the Fed will look at a full range of data towards their mandate and symmetric objective, although we are somewhat scarce of such considering the current government shutdown.
FOMC statement:
TD Securities Global Rates, FX & Commodities Strategy offered a like for like Jan 30 FOMC statement:
US data
On the data front, the January ADP employment figures came in strong at 213k (last: 263k) with gains broad-based across sectors. The 3-month average is running at 207k, confirming that the labour market is in good shape. However, global economic headwinds could be of more concern moving forward and hence the Fed’s vigilant approach and upside risks in the safe haven metal.
Gold levels
The technicals stay bullish with the helping hand of the fed today. However, RSI is en route towards prior highs for 2017 and 2018 levels. The key weekly/daily 76.4% at 1314 has been taken out, but there is little new in the Fed today, everything was long emphasised, as Powell explained in the presser, so, a mean reversion would see prices back towards 1304, then 1299 and 1295 as a 50% retracement of the recent upside. On an extension 1340 is around the 161.8% target. On the flipside, the 21-D SMA is now found down at 1289.
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