Gold Price Holds $ 1,950 Despite Investors Standing Behind Fed Mixed Signals

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(Kitco News) Gold had a very quiet but downbeat session with prices trading close to $ 1,950 for most of Thursday.

In the afternoon, gold saw a slight uptick with the Comex gold futures of December last trading at $ 1,960.30, down 0.51% on the day.

The decline in gold began to accelerate on Wednesday after the Federal Meeting’s minutes of the Federal Signal in July signaled a lack of interest in revamping bond yields and did not include any new information on a new type of guidance on expectations. of interest rate.

“The Fed was not as good as people wanted it to be. You saw a rally in the dollar, that was a rally from the bottom. Downtrend is now back, ”LaSalle Futures Group senior market strategist Charlie Nedoss told Kitco News on Thursday. “The declining pressure on gold has been the perception that interest rates are moving higher. I do not subscribe to that view. ”

Strength in the U.S. dollar has pushed gold down this week, Blue Line Futures chief strategist Phillip Streible said.

“The correlation between dollar and gold has been interesting. Both the US dollar and gold were seen as safe havens at the beginning of COVID-19. But now they have gone completely wrong. The dollar is fighting its two-year low. Gold is the first asset to fall because of the strength of the dollar, ‘Streible told Kitco News.

The US Dollar Index (DXY) climbed after the release of the Fed minutes, hitting its rebound from two-year lows. At the time of this writing, the index was trading at 92.77, down 0.12% on the day.

If the DXY can stay below 93, gold has a chance to start higher, Nedoss pointed out. “If the dollar starts to consolidate here and keeps the index below 93, gold will pay for itself. Keep an eye out for the American treasuries, ‘he advised.

A strong US dollar will not bode well for the metal bidder, but it is important to keep in mind that the dollar may rebound while still in a general downtrend, noted RJO Futures senior commodities broker Daniel Pavilonis.

“The thing about the dollar is that it has sold so much, it would not be out of the realm of opportunity to see a recovery,” Pavilonis told Kitco News. “Another aspect of the higher US dollar is the emerging markets of energy producers who have loans through dollars. While they are trying to pay them back, there is a shortage of USD, which should push the market higher. ”

At the moment, side action would be a positive sign for gold. Even a move above $ 1,973.70, which is the ten-day moving average, could push gold to $ 1,985, Nedoss added. Resistance is currently at $ 1,985.60 and support is at $ 1,920 an ounce.

The 20-year bond auction also had an effect on gold, just like the 30-year auction the week before, Pavilonis said.

“Gold is waiting to see what happens,” he stated. ‘Eventually, rates will continue to fall, forcing metals to push higher. The longer gold stays at current levels without making new cuts, the better it will be for prices. If you are going to shop here, stop by. ”

Pavilonis support level is at $ 1,930 and support is at $ 1,960.

Going forward, Fed comments such as news about U.S. stimulus sales are the key drivers to look at, Pavilonis added. “Ultimately, we’re looking for the printing press to continue and the Fed to push that yield curve lower and lower,” he said.

Every time Democrats and Republicans get closer over one part of the relief package, volatility in the U.S. dollar and gold increases, Streible added.

If gold falls below $ 1,930, the market bargain hunter will come out of the woodwork. “The $ 1,920- $ 1,930 is a major level of support,” Streible said.