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Price of Gold Fundamental Daily Forecast – Traders Indecisive Ahead of Fed Announcements

By:
James Hyerczyk
Published: Apr 29, 2020, 11:29 UTC

Gold investors will be watching to see if the Fed gives any clues on its future policy path after it responded to the economic devastation of the COVID-19 pandemic by slashing rates, buying bonds and backstopping credit markets.

Gold, Crude Oil, USD/JPY

Gold prices are inching lower shortly before the regular session opening on Wednesday. Prices are being capped by optimism over economies easing coronavirus lockdowns, stronger risk appetite and general nervousness ahead of the U.S. Federal Reserve’s monetary policy decision and press conference later in the day. Uncertainty regarding the spread of the coronavirus remains high, but it’s not enough to fuel panic-buying that has been the key driver of price action recently.

At 11:06 GMT, June Comex gold is trading $1718.90, down $3.30 or -0.19%.

Global Plans to Reopen Economy

Investors across the world are building their hopes that the pandemic may be peaking as parts of the United States, Europe and Australia gradually ease restrictions. New Zealand this week allowed some businesses to reopen.

A successful re-opening of business will help ease tensions over the length and depth of a widely expected global recession. This would ease demand for gold.

Fed Expected to Leave Policy Unchanged

Traders are expecting a lot of fresh news from the Fed when it releases its monetary policy statement at 18:00 GMT. Policymakers are expected to leave interest rates and quantitative easing unchanged. Furthermore, policymakers are seen keeping their promise to do whatever it takes to support the world’s largest economy.

Gold investors will be watching to see if the Fed gives any clues on its future policy path after it responded to the economic devastation of the COVID-19 pandemic by slashing rates, buying bonds and backstopping credit markets. After the release of its policy statement, Federal Reserve Chairman Jerome Powell will hold a press conference at 18:30 GMT. Because of the two events, traders should prepare for a two-sided move.

Demand for Risky Assets Pulling Money Away from Gold

When stocks were plunging a little over a month ago, gold fell as traders sold the precious metal to raise the cash needed to cover losses and to meet margin calls. For weeks, the two assets moved lockstep, but lately stocks have been pulling away from gold as investors express confidence in an economic recovery. On Wednesday, stock futures are rising again, helping to cap gains in gold.

Daily Forecast

Rising stocks and stronger than expected U.S. economic data could trigger a further decline in gold prices. We’re not looking for much from the Fed, but a hawkish outlook could send prices lower.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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