The Federal Reserve officials left interest rates unchanged Wednesday and cut their expectations for rate hikes in the next two years, brightening the outlook for gold and prompting prices to tap a high of $1,300 an ounce in electronic trading.
The Federal Open Market Committee’s “move to lower their long-term rate forecasts more in line with the market’s expectations highlights a clear road higher for gold,” said Brien Lundin, editor of Gold Newsletter. “With so much of the world now operating in a negative-rate environment, and now the path to higher rates in the U.S. being moderated, the outlook for gold is very bright.”
The Fed on Wednesday held interest rates steady and expects to raise rates twice in 2016. But the central bank trimmed expectations for rate hikes and now sees only three rate hikes in 2017 and 2018, down from a projection of four in both years.
The U.S. dollar also gave support to the precious metal as the U.S. Dollar Index fell on Wednesday. The index is a measure of the dollar against a basket of major currencies. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.
Investors are waiting for the release of the consumer price index, jobless claims, and Philadelphia Fed Business Outlook Survey on Thursday, and housing starts on Friday.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 2.08 tonnes to 900.75 tonnes on Wednesday, the highest since October, 2013.
Technically, August gold futures prices were nearer the session high and hit another four-week high today. The gold bulls have the solid overall near-term technical advantage and have upside momentum. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the May high of $1,308.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at last week’s low of $1,236.90. First resistance is seen at $1,300.00 and then at $1,308.00. First support is seen at today’s low of $1,281.30 and then at this week’s low of $1,275.20. Wyckoff’s Market Rating: 7.5
Reference: Xinhua, Market Watch, Kitco
Thai
Eng