Metals on Consolidation Pattern Ahead the Fed

Also, keep in mind that today is the last day of the month, so, experts are waiting for significant movements right after the FOMC decision. Potential profit taking and rebalancing are on the cards for gold, silver, and other metals.
Mauricio Carrillo
Metals on Consolidation Pattern Ahead the Fed
Metals on Consolidation Pattern Ahead the Fed

Gold is trading sideways as investors are waiting for the Federal Reserve announcement later in the day. Platinum and Palladium are moving slightly high, while silver and copper are posting losses.

Metal traders will be focusing on the commentaries in the press conference post-decision. Expectations are for a 25 basis points rate cut on Wednesday, but traders will pay attention to any hints on possible additional reductions in the second half of 2019.

“Since traders are already pricing in a September rate cut then calling today’s a cut a one-time event will be bearish for gold,” FX Empire analyst James Hyerczyk commented in a recent article. “On the other hand, if the Fed surprises with a 50-basis point rate hike then look for gold prices to spike higher.”

Also, keep in mind that today is the last day of the month, so, experts are waiting for significant movements right after the FOMC decision. Potential profit taking and rebalancing are on the cards for gold, silver, and other metals.

U.S. reports a better than expected ADP number

In the framework of this busy week, ADP number is a significant release as it marks the Nonfarm payrolls tone for Friday.

Earlier in the day, the Automatic Data Processing reported 156K new private jobs created in July, above the 150K expected by markets. June number was revised high from 102K to 112K.

Gold slightly positive ahead of FOMC

XAUUSD daily chart July 31

Gold is trading in range on Wednesday with small gains just ahead of the Federal Reserve rate decision later on the day.

Wednesday would be the fourth positive day in a row as investors are extending recoveries from July 25 low at 1,410, testing the 1,430 area today.

As for today, investors are waiting for developments in the FOMC, and they will pay attention to commentaries. Hyerczyk recommends that “instead of trying to read and interpret the Fed, just watch the Treasury yields.”

“If yields fall then the market thinks the Fed got it wrong. If yields rise then this will indicate the Fed got it right,” and it will affect the US Dollar and for instance, gold.

Besides, as the final day of the month is today, be aware of possible profit taking and rebalancing that could push the metal to do violent movements.

To the upside, immediate resistance is at the mentioned 1,430 area. Above there, 1,450 and 1,460 are the frontiers. As for the bearish side, look for the 1,410 as the first support, followed by 1,400 and 1,380.

Silver down after rejecting 16.60 again

XAGUSD daily chart Juy 31

Silver is trading down on Wednesday as the unit was unable to break above the 16.60 critical resistance and it was sent back to trade around 16.40.

Currently, XAG/USD is trading at 16.43, 0.80% negative on the day. Technical conditions are deteriorating, but the whole picture remains positive, at least in the middle and long-term.

Silver would remain in consolidation pattern between 16.40 and 16.60 at least until the Federal Reserve moves the market with its decision.

To the upside, next frontier is at the mentioned 16.60 area, above there, 16.80, 17.40 and 17.70. To the downside, 16.40, 16.30, and 16.00 levels are the prices to watch.

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