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After the Fed: Gold bulls lie in wait, 1,440/50 of interest

September 20, 2019 10:30

Source: Economic Events September 20, 2019 - Admiral Markets' Forex Calendar


While Gold didn't take on further bullish momentum after the Fed rate decision on Wednesday, instead stabilised below 1,500 USD, our middle-term bullish outlook stays intact.

With a thin economic calendar into the weekly close, we want to look at the Fed and its decision, and how that could affect the price action in Gold in the days to come.

So, after the Fed cut rates as expected by 25 basis points to 1.75 – 2%, the deeper cut of overnight reverse repos by 0.3% to 1.7% to alleviate funding pressures in short-term lending markets at the beginning of this week, potentially pointing to first signs of a credit crunch, financial stress and a favourable environment for Gold in general. Comments from Fed chairman Powell, stating during his press conference on Wednesday that the Fed may resume organic balance sheet growth earlier than expected (to put it differently: bringing a relaunch of QE on the table, at least between the lines) will rather sooner than later result in attention among Gold bulls.

While Gold didn't take the bait immediately, we still see the overall advantage in Gold on the upside, technically as long as we trade above 1,380 USD.

In fact, we consider the drop below 1,500 USD not at big deal at all, instead see a potential mid-term long trigger around 1,440/450 USD with an overall potential target around 1,650/700 USD in the weeks to come staying active:

Source: Admiral Markets MT5 with MT5-SE Add-on Gold Daily chart (between June 21, 2018, to September 19, 2019). Accessed: September 19, 2019, at 10:00pm GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2014, the value of Gold fell by 1.7%, in 2015, it fell by 10.4%, in 2016, it increased by 8.1%, in 2017, it increased by 13.1%, in 2018, it fell by 1.6%, meaning that after five years, it was up by 6.4%.


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