Gold – Peaks as Fed tempers expectations

Gold may have finally run out of steam

It’s been an impressive rally in gold over the last week in particular but it ran into a brick wall on Tuesday as Fed Chair Jerome Powell and FOMC voter James Bullard delivered a sprinkling of reality to investors.

The message was much less dovish than traders had taken away from the meeting last week – not by accident I’m sure – prompting a bounce in the dollar which in turn weighed on gold.

Gold Daily Chart

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Interestingly, the rebound hasn’t been particularly strong and interest rate expectations haven’t adjusted too considerable which suggests markets remain engaged in a game of bluff with the Fed.

The rebound did occur around past resistance in gold – $1,440 – so perhaps the timing was convenient. The first test of support may come around $1,400.

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.