08:57, 19 July
Surges to Six Year High Near $1450 on Rate Cut BetsIn the last two days gold has surged higher off support at $1400 to a new six year high near $1450. It has been well supported by the $1400 level for the last month or so, and any time it has moved lower, it has been quickly bought up and supported, pushing it back above this level. Several weeks ago, gold enjoyed a strong surge higher through resistance at the $1350 level, which had been repelling prices despite multiple rallies to push through that level, after having provided stiff resistance to gold on numerous occasions in the last couple of years. The $1350 level is now likely to offer support to gold should it decline from its current levels.
Leading up to its recent range below $1350, gold surged higher to move sharply away from the key $1270 level, through any resistance at $1300 and to a then one year high just shy of the $1350 level. It had been content for the week or so prior to enjoy support from the $1270 level, a level which had ably support the precious metal for the last six weeks or so, despite its best efforts to push lower.
In May gold surged higher to its highest level in a month reaching and testing the key level of $1300 before declining again back to $1270 and for the best part of April and May, gold consolidated and traded between $1270 and $1300, before its recent surge and departure from this trading range. 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.
The $1300 level has played a significant role with gold in the last few months and has more recently offered strong resistance to any movement higher. This level will be likely to also offer some support now should gold return back below the $1350 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 support at this level.
Gold has received a solid boost recently as the dollar has fallen strongly after weaker-than-expected U.S. housing data. Last month the Federal Open Market Committee (FOMC) voted 9-1 to keep the benchmark rate in a target range of 2.25% to 2.5%. Despite cautious wording in the post-meeting statement, financial markets are still betting and almost demanding the U.S. Federal Reserve (Fed) cuts rates soon, even as early as this month. During his post meeting press conference, the Fed Chairman Mr Jerome Powell said, “Many participants now see the case for somewhat more accommodative policy has strengthened.” In his closely-watched testimony on monetary policy to U.S. Congress recently, Chairman Powell presented a downbeat outlook for the U.S. economy. Although the US recorded strong jobs growth in June, other major economies' "data have continued to disappoint ... across Europe and around Asia, and that continues to weigh," Mr Powell said. "Manufacturing, trade and investment are weak all around the world ... We have agreed to begin (trade) discussions again with China, and that is a constructive step. It doesn't remove the uncertainty."