Home Gold loses momentum, edges lower toward $1300
FXStreet News

Gold loses momentum, edges lower toward $1300

  • US Dollar Index recovers to mid-96s.
  • European equity indices post losses on Wednesday.
  • Markets are focused on FOMC announcements.

After meeting resistance near $1310 area yesterday, the XAU/USD pair reversed its course on Wednesday and eased from its weekly highs as the greenback gathered some strength ahead of the critical FOMC decisions. As of writing, the pair is trading at $1303, losing 0.22% on a daily basis.

The US Dollar Index, which posted daily losses for the seventh time in the last eight trading days on Tuesday, staged a modest recovery today and was last seen adding 0.05% on the day at 96.46. However, the lack of fundamental drivers suggests that the index is making technical movements, which are unlikely to gain momentum ahead of the Fed’s announcements.  

In a recently published article, TD Securities analysts said that they anticipate the dot plot to suggest one more hike (to neutral) this year, and potentially no additional hikes in 2020 based on recent comments from several Fed officials. “More clarity about when runoff ends, and the size of the balance sheet at that time, should be forthcoming, if not in a separate statement then as part of Powell’s press conference. Look for a neutral market reaction, as outright rate cuts are priced for 2019,” analysts added.

On the other hand, reports of BMW warning investors of a significant drop in profits in 2019 weighed on major European equity indexes today and hurt the market sentiment, helping the pair float above the $1300 handle. At the moment, Germany DAX is losing more than 1% on the day and the Euro Stoxx is down around 0.6%.

Key technical levels

 

FX Street

FX Street

FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions.