Gold is consolidated in the $1640s in wind-down markets ahead of Fed’s Powell

• Gold remains consolidated between $1,643 and $1,650 as traders monitor COVID-19 impact.
• Fed on hold for foreseeable future, bullish for gold. 

The markets are quieter in Asia following a strong performance on Wall Street with US stocks bouncing back from the prior session’s lows. Gold has moved into consolidation between $1,647.60 and $1,650, resting in wind-down markets into the Easter holidays following an almost full reversal from the mid-March lows. 

FOMC minutes show Fed on hold

The focus was the minutes from the Federal Reserve’s March 3 and March 15 meetings which revealed anxiety over the virus and the extremely large degree of uncertainty. There was a muted reaction to the minutes as they didn’t show anything that hasn’t already been priced in.

The Fed is not expected to make any changes. There will be no tapering until there is a clear path to the road of recovery and until the US economy can get up and out of its COVID-19 lockdown sickbed. With certainty, the Fed will remain on the cautious side and gold prices can take up the flack while traders continue to monitor the news on developments pertaining to the virus pandemic.

“Looking forward, we continue to see a set-up for a multi-year bull market being cemented, as the market is flooded with monetary and fiscal stimulus, while Fed rates are at the zero bound, which suggests investors will continue to seek gold’s warm embrace as real global rates become entrenched in negative territory,”

analysts at TD Securities explained. 

For the day ahead, Federal Reserve’s chair Jerome Powell who delivers a speech titled “Economic Update” via webcast from 10:00, NY time. There will also be a focus on the US data and initial jobless claims again after two record-breaking weeks.

“The median forecast is 5.5 million new filings in the week to 4 April, after 6.648 million the prior week, which was 10 times larger than the worst week of the GFC. Continuing claims for the week to 28 March are seen jumping to 8.236 million,”

analysts at Westpac explained. 

Gold levels