Gold hovers above $1,400
We’ve seen some profit taking in gold over the last couple of days, following hints from various Fed officials that market expectations for rate cuts are a little over the top.
These warnings haven’t exactly fallen on deaf ears, with three cuts still more than 60% priced in this year, but expectations of a 50 basis point cut next month have slipped, for good reason. Traders are still absolutely convinced that a cut is happening though.
US Interest Rate Probabilities
Source – Thomson Reuters Eikon
The comments have brought some relief in the dollar, which came under heavy pressure after last Wednesday, which has in turn taken the edge off the gold rally. Still, it continues to hold above $1,400 which is the first test of support for the yellow metal. Should it break through here, then $1,370-1,375 may provide further support.
Gold Daily Chart
The rally doesn’t appear to be lacking in momentum though so bears may have a job on their hand. The next rally – assuming we get it – will be very interesting from that perspective. Naturally, the recent peak is the most notable level of resistance, initially. Above here, the area around $1,475-1,485 has previously been an area of support and resistance so may be of interest again.
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