10:14, 02 May

Eases Below $1280 as Fed Holds Rates Steady

In the last few days gold has eased lower again after pushing up towards $1290, and looks likely to threaten to push through the recent support at $1270. A few weeks ago gold fell sharply from sitting just above the key level of $1300 to fall to a new low for 2019 just below $1270, where it received solid support from.
Having fallen below the $1300 level a few times in the last two months, gold has done well to find some support and slowly climb its way back above this level however the recent drop could be telling as sellers may start to line up at the $1300 level poised to maintain pressure on gold and keep it below this level.

Earlier in February, gold was cruising along pushing to new nine month highs on the back of solid support from the key $1300 level, before crashing lower pushing through any support at the $1300 level and starting to challenge any of support at this level. Since the highs in February, gold has reversed and formed a medium term down trend with its lower peaks and lower troughs. There has been a little bit of support at $1290 propping up gold just below the $1300 level however this recent fall has shattered that too.

In late January gold enjoyed a solid push higher, breaking through resistance at $1300 and establishing a new trading range above this level. The significance of $1300 is for several weeks, gold met stiff resistance at this level, after enjoying a healthy surge higher throughout December. The move higher in December saw gold move to a then six-month high just shy of $1300 after enjoying some solid support from the key $1240 level and the $1200 level before that. The $1240 level may play a role again should gold continue to decline as it is the next obvious support level.

On Wednesday the U.S. Federal Reserve held interest rates steady and indicated little urgency to adjust them any time soon, based on economic growth and continued job gains, and the likelihood that weak inflation will edge higher. “We think our policy stance is appropriate at the moment; we don’t see a strong case for moving it in either direction,” Fed Chairman Jerome Powell said in a press conference following the end of the central bank’s latest two-day policy meeting. “I see us on a good path for this year”, he said. The Fed statement said “economic activity rose at a solid rate” while again noting that job gains “have been solid” and that the unemployment rate “has remained low.” The jobless rate is at 3.8%, around its lowest level in 50 years. On inflation, the statement said, “market-based measures of inflation compensation have remained low in recent months.” Some analysts believe the Fed’s stance is related to the lack of inflation, declining fears about Brexit and on reports that there could be a deal with China imminent. Unfortunately for gold, recent economic numbers have been reasonably solid and equity markets are strong.