FXEMPIRE
All
Ad
Corona Virus
Stay Safe, FollowGuidance
World
95,479,062Confirmed
2,039,601Deaths
68,167,161Recovered
Fetching Location Data…
Advertisement
Advertisement
James Hyerczyk
Gold

Gold futures are inching higher on Wednesday shortly after the regular session opening. Traders are showing little reaction to the two-sided volatility in the U.S. Dollar Index as most have opted to take to the sidelines ahead of the release of the U.S. Federal Reserve monetary policy statement later in the day at 18:00 GMT.

At 12:35 GMT, December Comex gold futures are trading $1972.70, up $8.80 or +0.45%. This is also up from yesterday’s low of $1927.50 that was reached after the market plunged $72.50 following a trade at $2000.00.

Advertisement
Know where Gold is headed? Take advantage now with 

75% of retail CFD investors lose money

Yesterday’s price action was essentially fueled by profit-taking ahead of today’s Fed announcements. The move has actually brought an air of caution to the market, given today’s limited reaction to the U.S. Dollar Index hitting another two-year low earlier today.

The Fed will release its interest rate decision and monetary policy statement at 1800 GMT. Policymakers are widely expected to keep rates unchanged. Federal Reserve Chairman Jerome Powell is also expected to hold a post-meeting press conference.

The Fed’s dovish statement should keep gold underpinned, while Powell could trigger another surge to the upside if he sternly warns about the economic consequences over the United States’ inability to contain the spread of the coronavirus.

Meanwhile, Republicans in the White House and the U.S. Congress struggled to reach a deal over a $1 trillion aid plan. This could become another bullish factor if there is a prolonged debate because the economy could weaken at a faster clip if the government allows the current stimulus program expire on July 31.

China Banks, Regulators Move to Cool Gold Rush

In news that could have a negative effect on global demand for gold, Chinese regulators and major banks are rushing to curb precious metal trading by domestic investors to temper speculation that some fear could cause a repeat of this year’s oil trading mishaps.

The scramble to limit risks comes as gold prices hit record highs this week, spurred by investors hunting for safe haven assets in markets rattled by worries of rising coronavirus cases, lofty equity valuations and a falling U.S. Dollar, Reuters reported.

Regulators are mindful of risks after investors were caught off guard in late April when the Bank of China settled a crude oil futures trading product known as Yuan You Bao at minus $37.63 per barrel, following a historic slide in oil prices into negative territory. The bank subsequently agreed to settle with more than half its customers facing losses, potentially taking a 6 billion to 7 billion yuan hit.

Advertisement

Daily Forecast

The limited reaction to the volatility in the U.S. Dollar earlier today suggests to me that gold traders are likely to keep their powder dry until the Fed announcements at 18:00 GMT.

Gold traders will be primarily interested in any moves by the Fed that suggests more liquidity will be hitting the economy. This news should trigger a bullish move. Furthermore, the tone of Powell’s press conference could also trigger a rally if he warns the economic recovery could slow if COVID-19 cases continue to surge.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US