09:22, 24 May

Rebounds off Key $1270 Level after Fed Minutes

In the last week or so gold has fallen sharply from the resistance and key level at $1300 back down towards the most recent support level around $1270 before bouncing off this level strongly in the last 24 hours. This level has ably supported gold in the last month or so after numerous attempts to push lower. Only a week or so ago, gold surged higher to its highest level in a month reaching and testing the key level of $1300 before the recent decline.
For the best part of the last several weeks gold has consolidated and traded between $1270 and $1290 after falling through the $1300 level earlier last month. Earlier in April, 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.

Gold has done well in the last few weeks to bounce off the $1270 level as it has been tested a number of times and looked poised to move lower again to new lows for 2019 before support has kicked in. The $1300 level has played a significant role with gold in the last few months and right on cue, the sellers jumped in again at this level and prevent prices from moving higher for the time being. 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 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. 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 below $1270.

The minutes from the Federal Open Market Committee meeting held on 1-2 May have made it clear that no rate moves are coming ‘for some time’ even if the economy improves. Whilst saying that rates likely will remain unchanged well into the future, Fed officials remained firmly committed to a “patient” policy stance. “Members observed that a patient approach to determining future adjustments to the target range for the federal funds rate would likely remain appropriate for some time, especially in an environment of moderate economic growth and muted inflation pressures, even if global economic and financial conditions continued to improve,” the meeting summary stated. In previous meetings this year, Fed officials had expressed concerns about ongoing U.S. - China trade disputes, an untidy Brexit situation and slowing global growth. However, the minutes from the early May meeting displayed a more positive tone. “A number of participants observed that some of the risks and uncertainties that had surrounded their outlooks earlier in the year had moderated, including those related to the global economic outlook, Brexit, and trade negotiations,” the minutes said.