Gold Poised for Deep Correction Towards $1280 After Yellen Remarks
Gold on Wednesday slumped more than $30 an ounce following the Federal Reserve's decision to reduce the Quantitative Easing (QE) and Yellen's remarks on the first rate hike. The precious metal gave the yesterday closing below the 61.8% fib level as well as the channel support of the daily upward slope.
Technical Analysis
The yellow metal is being traded around $1331 an ounce at 2:45 GMT in Asia. Resistance may be noted near $1337 that is the confluence of 61.8% fib level and channel support turned resistance. A break and daily closing above the old channel could push the metal again into bullish momentum, opening doors for $1373 and then the $1400 milestone.
On the downside, the metal is expected to find support around $1307 an ounce that is the 50% fib level and then $1300 that is the 200 Daily Moving Average (DMA) and the psychological level. A daily closing below the $1300 handle might be targeting $1278 which is the confluence of 100 DMA and 38.2% fib level.
Fed Tapering
Fed yesterday kept the benchmark interest rate unchanged at 0.25% but reduced the monthly asset purchase program by $10 billion to $55 billion, a sign that the economy is growing steadily without the stimulus. It is pertinent that the minutes from the Fed January meeting showed the policymakers were planning to scrap the entire QE by the end of October this year through successive tapering.
First Rate Hike
Fed chair Janet Yellen yesterday said the central bank could increase the interest rate as soon as the next six months, the remarks which were totally surprising and against the Fed forward guidance stance. Commodities, currencies and bonds fell sharply after the Yellen remarks. The same trend is likely to continue today or may be even throughout the next week.
US Inflation
The day before yesterday, the US inflation data was published by the US Bureau of Labor Statistics. The outcome was mostly in line with the expectations, as for all urban consumers CPI increased 0.1 percent in February on a seasonally adjusted basis as expected by the market. However, over the last 12 months, all items CPI increased 1.1 percent before seasonal adjustment, missing the expectations of 1.2%. I do not believe that this outcome will change the mood of the fed members. So, inflation at the moment is floating in line with the fedâEUR(TM)s expectations.
To learn more about the precious metals, currencies and stock markets, join us at Capital Trust Markets
Capital Trust Markets is an online Forex Brokerage, offering a flawless trading environment to traders of all types. The world class trading infrastructure - backed up by advanced trading tools and cutting edge trading software and technology - is combined with award winning customer support to provide a highly successful blend of customized trading solutions.
Technical Analysis
The yellow metal is being traded around $1331 an ounce at 2:45 GMT in Asia. Resistance may be noted near $1337 that is the confluence of 61.8% fib level and channel support turned resistance. A break and daily closing above the old channel could push the metal again into bullish momentum, opening doors for $1373 and then the $1400 milestone.
On the downside, the metal is expected to find support around $1307 an ounce that is the 50% fib level and then $1300 that is the 200 Daily Moving Average (DMA) and the psychological level. A daily closing below the $1300 handle might be targeting $1278 which is the confluence of 100 DMA and 38.2% fib level.
Fed Tapering
Fed yesterday kept the benchmark interest rate unchanged at 0.25% but reduced the monthly asset purchase program by $10 billion to $55 billion, a sign that the economy is growing steadily without the stimulus. It is pertinent that the minutes from the Fed January meeting showed the policymakers were planning to scrap the entire QE by the end of October this year through successive tapering.
First Rate Hike
Fed chair Janet Yellen yesterday said the central bank could increase the interest rate as soon as the next six months, the remarks which were totally surprising and against the Fed forward guidance stance. Commodities, currencies and bonds fell sharply after the Yellen remarks. The same trend is likely to continue today or may be even throughout the next week.
US Inflation
The day before yesterday, the US inflation data was published by the US Bureau of Labor Statistics. The outcome was mostly in line with the expectations, as for all urban consumers CPI increased 0.1 percent in February on a seasonally adjusted basis as expected by the market. However, over the last 12 months, all items CPI increased 1.1 percent before seasonal adjustment, missing the expectations of 1.2%. I do not believe that this outcome will change the mood of the fed members. So, inflation at the moment is floating in line with the fedâEUR(TM)s expectations.
To learn more about the precious metals, currencies and stock markets, join us at Capital Trust Markets
Capital Trust Markets is an online Forex Brokerage, offering a flawless trading environment to traders of all types. The world class trading infrastructure - backed up by advanced trading tools and cutting edge trading software and technology - is combined with award winning customer support to provide a highly successful blend of customized trading solutions.