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(Kitco News) – The gold market, while its low took Wednesday afternoon, took a big hit Wednesday afternoon after the Federal Reserve signaled that it was not ready to cut interest rates quickly at any moment.
Of those participants who discussed this option, most judged that revenue caps and targets would likely provide only modest benefits in the current environment, ‘read the minutes of the US Federal Reserve’s monetary policy meeting in July.
The gold market had been under significant selling pressure for most of Wednesday ‘session and gave up all profits from the last two days after the release of the minutes.
December gold futures traded last at $ 1,945.1 an ounce, down 3.38% on the day.
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The minutes caused both the US dollar and the bond’s yield to push higher, adding some extra fuel to gold ‘s selloff. The US dollar traded last at 92.91, up 0.78% on the day. Meanwhile, the yield on 10-year US notes was late trading at 67 basis points up more than 1% on the day.
“The gold market wants to see clear control over yield curves, ”said Adam Button, chief currency strategist at Forexlive.com. “I think this sale is a bit done, but clearly the markets have a gun for the Fed ‘s holes. If not ‘t wants to hear nothing but printing press. ”
Although gold fell sharply on Wednesday, Button added that he does not ‘I think the minutes are a game changer for the precious metals market. He added that the Federal Reserve has repeatedly shown that it will do whatever it takes to support the US economy.
Button also said the drop in gold could create another buying opportunity for investors waiting on the sidelines.
While gold ‘s selloff Wednesday has been more dramatic than some analysts had expected, with many expecting the market to enter a consolidation period after hitherto being without hassle this year.
Despite the selling pressure, many analysts have said that gold is still in a trend.
“Less than two weeks ago, the yellow metal set a record high, so the broader bullish trend is still intact, ”said David Madden, senior market analyst at CMC Markets.
Daniel Ghali, commodity strategist at TD Securities, said momentum and speculative interest have pushed gold prices higher and the question investors need to ask themselves is how long can this trend last?
“I think this market still has a bit of momentum, but it ‘is close to the top, ‘he said. “The rubber band is really up to the limit and some point to it ‘will give and then we will see some pain. ”
Ghali added that although there is potential for a sharp position pressure in the gold market the question is what happens next.
After some short-term volatility, Ghali said they expect to see gold prices push higher.
“Fundamentally, the interest rate will not go up and there will still be a lot of economic uncertainty, ”he said. “Gold ‘s Bullish narrative long-term hasn ‘t has changed and is still compelling just not for any price. “
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither does Kitco Metals Inc. nor can the author guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article does not accept any liability for loss and / or damage resulting from the use of this publication.
