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Gold, Metals Mixed Ahead of the Fed, BoJ, BoE, NFP

By:
Mauricio Carrillo
Updated: Jul 29, 2019, 12:19 UTC

Technical conditions for gold are weak. Only the Fed would give life to the metal and give it enough power to break above the 1,430. Think that the 25 basis point is already priced in.

Gold, Metals Mixed Ahead of the Fed, BoJ, BoE, NFP

Metals such as gold, silver, copper, palladium, and platinum are trading mixed on the first day of the week. Investors are focused on central banks rate decisions and possible hints about post-decision actions.

On the other hand, a rallying U.S. Dollar index is jumping to highs since May 31 as the unit is extending gains above 98.00. Investors are expecting reluctance in the Fed about more than one rate cut.

Here comes the Federal Reserve

The economic calendar for the week looks pretty busy with three major central banks taking monetary policy decisions. Also, Consumer Price Index in Australia, Personal Spending and Income in USA, GDP in the eurozone, and Finally, the fireworks with the U.S. employment report.

On Tuesday, the Bank of Japan will publish its monetary policy release. The market expects the bank to remain unchanged at -0,1% for another month.

On Thursday, the Bank of England will publish its first-rate decision after new Prime Minister Boris Johnson came into power. Experts anticipate no changes in the BoE monetary policy, but they are looking for hints about Brexit and new movements. BoE is currently 0.75% interest rate and an Asset Purchase Facility of £435B.

The event of the week will be the FOMC rate decision that the Fed will announce on Wednesday after its two-day meeting. The market is expecting a 25 basis points t0 2-25% from 2.50%.

However, expectations are not that secure as the 100% os possibilities priced in earlier in the month. Today, according to the CME FedWatch tool possibilities are about 76.5% of chances for a 25 bp cut. Just 23.5% for 50 bps reduction.

The market will also focus on any hint about possible further rate cuts in the next FOMC meetings.

FEDWATCH July 29
FEDWATCH July 29

Finally, the United States will publish its employment report on Friday. Nonfarm payrolls would announce 170K new jobs created in July. The unemployment rate would remain unchanged at 3.7% in July.

Gold slight positive, but in range

XAUUSD daily chart July 29
XAUUSD daily chart July 29

Gold opened the week with slight gains on Monday as investors are confident about a rate cut in the Federal Reserve, but the rally in the U.S. dollar index contains the unit.

Gold is currently trading 0.10% positive on the day at 1,420. XAU/USD is supported by the 20-day moving average at 1,415 but held by the 1,430 area.

Technical conditions for gold are weak. Only the Fed would give life to the metal and give it enough power to break above the 1,430. Think that the 25 basis point is already priced in.

To the downside, a break below the 1,415 would open the door to the 1,400 area and the critical 1,380.

Silver trades sideways around 16.40

XAGUSD daily chart July 29
XAGUSD daily chart July 29

Silver is trading horizontally on Monday as the unit is waiting for economic developments including the Fed decision.

XAG/USD is now moving in a small range between 16.35 and 16.45. Technical conditions are deteriorating with chat pattern suggesting more consolidation ahead of the FOMC decision.

To the upside, 16.60 is the frontier, while the 16.30 is the support to the downside.

Metals report for July 29. 2019

Copper is trading slightly positive on Monday with the unit using the 50-day moving average at 2.6805 as support. Technical conditions are weak for copper with the next support at 2.6700 and then the 2.6200.

Platinum is bouncing back from 860.00 reached on Friday, and the metal has opened the week with recoveries at 870.30. XPT/USD is posting 0.60% daily gains. Watch out for the 877.80.

Palladium remains contained by the 20-day moving average at 1,545 as it is trading negative on Monday and testing the 1,520 area. Currently, XPT/USD is trading 0.35% negative at 1,525.

About the Author

Mauricio is a financial journalist with over ten years of experience in stocks, forex, commodities, and cryptocurrencies. He has a B.A and M.A in Journalism and studies in Economics by the Autonomous University of Barcelona. While traveling around the world, Mauricio has developed several technology projects focused on finances and communications. He is the inventor of the FXStreet Currency Poll Sentiment index tool.

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