Gold Price Talking Points
The price of gold appears to be broadly tracking a change in tellurian equity prices as bullion tags a uninformed monthly low ($1883) progressing this week, and a serve change in risk view might coax a exam of a Aug low ($1863) as Relative Strength Index (RSI) sits during a lowest spin given March.
Gold Price Trades Below 50-Day SMA for First Time Since June
The cost of bullion trades subsequent a 50-Day SMA ($1941) for a initial time given Jun even yet Federal Reserve Chairman Jerome Powell strikes a dovish tinge in front of US lawmakers, and it stays to be seen if a pullback from a record high ($2075) will spin out to be a change in marketplace behavior or an depletion in a bullish trend as a Fed stays “committed to regulating a collection to do what we can, for as prolonged as it takes, to safeguard that a liberation will be as clever as possible.”
The cost movement following a Federal Open Market Committee (FOMC) seductiveness rate decisions suggests market participants wereanticipating a some-more dovish brazen superintendence as the executive bankplans to “achieve acceleration that averages 2 percent over time,” and it seems as yet a FOMC will rest on a stream collection to support a US economy as Summary of Economic Projections (SEP) shows a longer run seductiveness rate foresee unvaried from a Jun meeting.
Recent remarks from Chairman Powell also prove that a FOMC is in no rush to change a trail for financial process amid a “adjustments to Main Street to yield larger support to tiny and medium-sized businesses and to nonprofit organizations,” and a Fed might continue to tweak a lending comforts rather than muster some-more radical collection as a executive bank vows to “increase a land of Treasury bonds and group mortgage-backed bonds during slightest during a stream pace.”
In turn, loss conjecture for additional financial support might continue to corrupt risk ardour as Fed officials insist that the “recovery has progressed some-more fast than generally expected,” yet a crowding function in a US Dollar mostly persists even yet retail traders spin net-long GBP/USD.
The IG Client Sentiment news continues to uncover retail tradersnet-long USD/CHF, USD/CAD and USD/JPY, with a throng still net-short AUD/USD, EUR/USD and NZD/USD. Positioning in GBP/USD has flipped for a second time this month as 50.72% of traders are now net-long the pair, yet broader marketplace trends might insist over a residue of a month as a Fed’s change sheet binds above $7 trillion in September.
With that said, a Fed’s dovish brazen superintendence may continue to worsen a seductiveness of bullion as an choice to fiat-currencies, and the bullish trend in bullion might continue to coincide with a crowding function in a US Dollar as a macroeconomic opinion stays mostly unvaried following a FOMC meeting.
However, the technical opinion is dark with churned signals as the cost of bullion trades subsequent a 50-Day SMA ($1941) for a initial time given June even yet a relocating normal continues to lane a certain slope from progressing this year, and a Relative Strength Index (RSI) might continue to uncover a bullish movement reducing as it sits during a lowest spin given March.
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Gold Price Daily Chart
Source: Trading View
- The cost of bullion pushed to uninformed yearly highs during each singular month so distant in 2020, with a bullish cost movement also holding figure in Aug as changed steel tagged a new 2020 high ($2075).
- The cost of bullion privileged a prior record high available in Sep 2011 ($1921) even yet a Relative Strength Index (RSI) unsuccessful to keep a ceiling from June, yet a indicator registered a new impassioned reading (88) for 2020 as a oscillator pushed into overbought domain for a third time this year.
- However, a bullish function has unsuccessful to manifest in Sep as a cost of bullion trades subsequent a 50-Day SMA ($1941) for a initial time given June, with new developments in a RSI negating a wedge/triangle formation determined in Aug as a indicator sits during a lowest spin given March.
- Lack of movement to reason above a $1907 (100% expansion) to $1920 (161.8% expansion) segment brings a Aug low ($1863) on a radar as it mostly lines adult with a Fibonacci overlie around $1847 (100% expansion) to $1857 (61.8% expansion), with a subsequent area of seductiveness entrance in around $1816 (61.8% expansion) to $1822 (50% expansion).
- At a same time, disaster to mangle a Aug low ($1863) might beget operation firm conditions, yet need a break/close above a overlie around $1971 (100% expansion) to $1985 (261.8% expansion) to move a topside behind on a radar.
— Written by David Song, Currency Strategist
Follow me on Twitter during @DavidJSong