Gold to Highs Since 2013 on Fed, 100% of Probabilities of a Rate Cut in July

Gold is trading at highs since 2013 as the dollar is getting hurt by the notion that the Federal Reserve will cut interest rates for sure in July.
Mauricio Carrillo
Gold to Highs Since 2013 on Fed, 100% of Probabilities of a Rate Cut
Gold to Highs Since 2013 on Fed, 100% of Probabilities of a Rate Cut

Gold is rallying for the third day in a row but this time with more violence as investors welcomed Federal Reserve dovish stance and it signaled a possible rate cut as soon as next month.

Other metals such as silver and palladium are trading higher too with the XPD/USD consolidating gains above the 1,500 level. Only the Platinum is having problems to extend benefits, though it is positive on the day too.

The dollar index is falling hard for the second day in a row with the index testing now the 200-day moving average at 96.55. This level has been acting as a support for the Greenback in the last year with actually five tests since January.

If the DXY breaks below the 96.55 area, it will have a free way to the 95.55 critical support. A move that will fuel metals upside even more.

Metals report on June 20, 2018

XAUUSD post fed daily chart June 20

Gold jumped to trade as high as 1,394, its highest level since September 2013. The metal is now in consolidation mode as it is pricing 1.70% positive in the day at 1,380. The metal has now new support at 1,360 and a solid floor at 1,340.

As Saxo Bank commodity strategist Ole Hansen said in a recent note, “the driver for the surge is obviously the Fed delivering the dovish tilt that the market was looking for. It removed the ‘patience’ approach to cutting rates.”

Technical indicators suggest that the gold will extend gains in the next days and the 1,400 seems a matter of time. A weak dollar index is supporting gold’s upside.

Silver is rallying for the third day after the unit broke above the 15.20 area on Thursday to trade as high as 15.40, its maximum since March 27. The odds have changed, and the metal looks bullish now, especially after consolidating levels above the channel between 14.60 and 15.10.

Copper also broke a significant resistance on Thursday. A weak dollar helped the XCU/USD to break the 2.7015 level and to trade at highs since May 21 at 2.7335. Next resistance is now at the 2.7600 area where the 50 and 200 days moving averages are in confluence.

As reported yesterday, palladium was ready to break above the 1,500 area, and it delivered on Thursday. XPD/USD is joining the weak dollar and pro-metals environments, and it is extending gains for the tenth day in the last eleven with the unit reaching the 1,535 level, fresh high since March 27.

Platinum extended its recovery from the 790.00 area, and it is now testing prices above the 820.00 level. However, the metal doesn’t look too strong enough to close above that area.

Traders expect a rate cut in July, and they are pricing in

FedWatch Tool June 20

Investors are taking a rate cut on July for sure according to the CME FedWatch Tool with a 61.5% of probabilities for a rate of 25 basis points to 2.00%-2.25% from the current 2.25%-2.50%.

In the same way, 38.5% of traders believe in a 50 basis points cut to 1.75%-2.00%. There are no probabilities for the Fed to maintain rates unchanged. At least it is what the FedWatch tool says.

So, investors are trading with that condition in mind, and the dollar is suffering the consequences and the Euro, Pound and metals such as gold and silver enjoying the situation and reaching highs against the Greenback.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All

Top Promotions

Top Brokers

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