Will a dovish FED lead to a bullish yearly close for Gold?

Oktober 30, 2019 10:00

Source: Economic Events 30 October 2019 - Admiral Markets' Forex Calendar

Today, all eyes are on the FED rate decision.

While a rate cut of 25 basis points is nearly completely priced in (currently the FED Watch Tool shows a likelihood of way over 90%), what's certainly of higher interest is the rhetoric in regards to the rate decision in December and the announced "Non-QE"-QE program.

In regards to the latter, the current plan is to buy US Treasuries for the next 8.5 months at a pace of 60 billion USD per month, and any hints at Wednesday's meeting that the FED could consider extending that program if there are no liquidity improvements could result in Gold taking on bullish momentum. This could lead Gold to recapture 1,500 USD, with US yields expected to push lower again.

If in addition to such a dovish rhetoric, speculations around another 25 basis point rate cut for the December meeting are taking on momentum again (currently the FED Watch Tool sees a surprisingly low likelihood of below 20% for such a rate cut), and the upcoming US economic releases, especially the ISM Manufacturing on Friday, could trigger further bullish momentum in Gold into the weekly close.

If the ISM data continues to trend lower and result in rising recession fears (for September the ISM Manufacturing dropped to 47.8, the steepest contraction in the manufacturing sector since June 2009), the yellow metal has a good and solid chance to go for an attack at the region around 1,520 USD.

In general and from a technical perspective, the advantage in Gold stays on the Long side above 1,380 USD and our mid-term target around 1,650/700 USD is still active.

And again: even a stint below the current October lows around 1,460 USD wouldn't darken the picture, but instead bring a potential mid-term long trigger around 1,440/450 USD into play:

Source: Admiral Markets MT5 with MT5SE Add-on Gold Daily chart (between 31 July 2018 to 29 October 2019). Accessed: 29 October 2019 at 10:00 PM 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%.

Disclaimer: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter "Analysis") published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:

  1. This is a marketing communication. The analysis is published for informative purposes only and are in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
  2. Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the Analysis.
  3. Each of the Analysis is prepared by an independent analyst (Jens Klatt, Professional Trader and Analyst, hereinafter "Author") based on the Author's personal estimations.
  4. To ensure that the interests of the clients would be protected and objectivity of the Analysis would not be damaged Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
  5. Whilst every reasonable effort is taken to ensure that all sources of the Analysis are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis. The presented figures refer that refer to any past performance is not a reliable indicator of future results.
  6. The contents of the Analysis should not be construed as an express or implied promise, guarantee or implication by Admiral Markets that the client shall profit from the strategies therein or that losses in connection therewith may or shall be limited.
  7. Any kind of previous or modeled performance of financial instruments indicated within the Publication should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
  8. The projections included in the Analysis may be subject to additional fees, taxes or other charges, depending on the subject of the Publication. The price list applicable to the services provided by Admiral Markets is publicly available from the website of Admiral Markets.
  9. Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, you should make sure that you understand all the risks.
Avatar-Admirals
Admirals Vse rešitve na enem mestu za porabo, investiranje in upravljanje denarja

Več kot samo broker, Admirals je finančno središče, ki nudi široko paleto finančnih produktov in storitev. Omogočamo vam upravljanja vaših osebnih financ preko enkratne združene rešitve, ki omogoča investiranje, porabo in upravljanje denarja.