Gold Attempts Recovery from FOMC-Minutes-Led Slide

Gold Attempts Recovery from FOMC-Minutes-Led Slide

19 May 2016, 07:52
Roberto Jacobs
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Gold Attempts Recovery from FOMC-Minutes-Led Slide

Gold found support once again at 1255 levels in early Asia, and from there takes on the recovery mode as the greenback moves-off seven-week tops reached a day before against its major peers after the FOMC minutes.

Gold capped below $ 1260

Currently, gold trades -0.15% lower at 1258.70, having posted day’ low at 1252.95 and day’s high at 1261.37. The bullion is seen reversing a part of yesterday’s intensive slide amid a minor correction in the US dollar across the board as dust settles over the FOMC April meeting minutes aftermath.

The Fed minutes revealed that the Fed officials thought a June rate hike was appropriate given the recent strength in the US fundamentals and therefore, surprised the markets to the upside, weighing heavily on the non-interest bearing gold.

The odds of a hike in June, as tracked by the CME Group's FedWatch tool, rebounded to a 19% on Wednesday after the minutes release, that was markedly higher than the low single digits seen roughly a week ago.

The precious metal will continue to consolidate the downside as markets will speculate the timing of the next Fed rate hike on the upcoming Fed speaks. Besides, the usual weekly jobless claims and regional manufacturing index will be eyed for fresh momentum.

Gold Technical Levels

The metal has an immediate resistance at 1267.90 (20-DMA) and 1270 (intermittent tops). Meanwhile, the support stands at 1252 (daily low) below which doors could open for 1250 (psychological levels).


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