Gold Higher on US Fiscal Uncertainty
Gold prices continue to rebound sharply today, helped by a weaker US Dollar, with the futures market now up almost 3% off initial weekly lows yesterday. The rally comes amidst a heavily bearish USD push this week with the DXY breaking down to fresh YTD lows. Uncertainty around the US fiscal outlook should Trump’s controversial tax and spending bill succeed has played a part in the US sell off this week. The move has also been fuelled by renewed focus on Fed easing against a backdrop of weaker US data and some dovish Fed commentary recently. Finally, an improving outlook on the US trade agenda is seen as reducing US inflationary risks, again putting focus back on near-term Fed easing expectations.
Fed Easing Expectations
On the Fed front, near-term easing pricing has been creeping higher. September is pegged as the next likely easing point for the Fed. However, pricing for a July cut has risen to just under 30%. Looking ahead this week traders will be paying close attention to the latest US jobs data on Thursday. If we see any downside surprise in those readings, July pricing will likely rise again, putting further pressure on USD while pushing gold prices higher. Only an upside surprise this week or Trump’s tax bill failing is likely to cap the rally in gold.
Technical Views
Gold
The sell of fin gold has stalled for now into the bullish trend line and 3,254.65 level support. With this area holding, focus is on fresh push higher and further challenge of the highs between 3,426.44 and 3,493.81. Below the trend line, 3,164.82 is the deeper support level to note.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.