Day four: our potential gold trade

The market went into the FOMC meeting expecting the Federal Reserve to give a much stronger hint on raising interest rates, given the improvement in inflation and employment. 


A simple look at various markets would tell you hawkish rhetoric failed to materialise, with good buying seen in equities and bonds, while the USD was sold off against high yielding currencies.

My own personal belief is that the Fed’s new projections on growth (to 2.2% for 2014) could be revised higher as we enter the latter stages of the year, although much will be determined on how a number of developing geo-political issue evolve.

It’s also interesting to see the Fed lift its funds rate (interest rate) projections for 2015 and 2016, with the market showing no concern whatsoever and failed to lift the USD at all.

Following on my potential trade idea yesterday, looking at the daily chart, momentum suggests higher levels could be seen, however key resistance is seen between $1282 and $1285. This is where the April downtrend, 55- and 200-day moving averages converge.

The Fed may have masked developments in Iraq; however with Brent prices pushing above $114, this could inspire gold bulls to push the price above this supply.

Click on chart to englarge.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.