Gold consolidates ahead of FOMC minutes
The main event for today is actually the release of the FOMC minutes tonight at 19:00 GMT – for which we have gold in focus.
The rise of US yields and increased expectations of a 50bp March hike mean the minutes have become of greater importance. As traders had assumed a 25bp February hike was practically a given, it could come as a surprise if we learn that the Fed were closer to opting for a 50bp hike than previously assumed – and that would likely increase bets of a 50bp hike in March, given the slew of strong US economic data we’ve seen of late. And that could be bearish for gold.
Our original call for a retracement towards 1900 has worked out quite well. It didn't quite reach 1900, but it was good enough for bears to fade into a move for the anticipated wave C lower - which we still have a target of around 1800.
Gold remains within a downtrend on the 4-hour chart and consolidating near its lows. You could say its leaning on the ropes, but also doing quite well considering how strong US yields performed yesterday. On the assumption that markets are sensitive to perceived hawkish FOMC minutes, I suspect gold will trey to push lower and test the lows around $1820. We may seen an initial move higher (given Friday’s bullish hammer on the daily chart), but the weekly pivot point and $1850 handle loom above – which I suspect will cap upside potential for now.
The rise of US yields and increased expectations of a 50bp March hike mean the minutes have become of greater importance. As traders had assumed a 25bp February hike was practically a given, it could come as a surprise if we learn that the Fed were closer to opting for a 50bp hike than previously assumed – and that would likely increase bets of a 50bp hike in March, given the slew of strong US economic data we’ve seen of late. And that could be bearish for gold.
Our original call for a retracement towards 1900 has worked out quite well. It didn't quite reach 1900, but it was good enough for bears to fade into a move for the anticipated wave C lower - which we still have a target of around 1800.
Gold remains within a downtrend on the 4-hour chart and consolidating near its lows. You could say its leaning on the ropes, but also doing quite well considering how strong US yields performed yesterday. On the assumption that markets are sensitive to perceived hawkish FOMC minutes, I suspect gold will trey to push lower and test the lows around $1820. We may seen an initial move higher (given Friday’s bullish hammer on the daily chart), but the weekly pivot point and $1850 handle loom above – which I suspect will cap upside potential for now.
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