Gold Catches 'Risk-Off' Bid Post BoJ

Gold Catches 'Risk-Off' Bid Post BoJ

28 April 2016, 09:19
Roberto Jacobs

Gold Catches 'Risk-Off' Bid Post BoJ

Gold has caught a strong bid following the decision by the Bank of Japan to leave its monetary policy unchanged, resultING in markets going into 'risk'off' mode, with Asian shares tumbling, including the Nikkei 225, down more than 3%.

FOMC, BoJ perfect bullish storm

The vigorous rise in the yellow metal has sent the price almost $20 higher from post FOMC lows of $1,238.00 up towards $1,256.00 highs, breaking the key resistance of $1,250.00 in the process. Gold is presently being assisted, not just by risk averse conditions, but also by broad-based USD weakness, following another dovish outcome by the FOMC, which makes a June rate hike as dubious as it was pre-event. According to the Fed fund rates, the chances for a June move currently stand at 33%, while July has the odds at 49%.

Gold key levels

1,255 represents immediate resistance area, as per sequence of intraday highs printed on April 19th-20th, followed by 1,260 ahead of critical 1,270; above the latter, expect 1,280 to come into play. On the downside, 1,250 should see buyers re-emerge to defend the level, followed by 1,245 daily pivot point ahead of today's low at 1,240. Note, the next event to inject volatility in the pair will be today's US GDP Q1, due at 12.30 GMT.


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