Gold Prices May Extend Recovery on Dec FOMC Minutes

Talking Points:

  • Gold prices corner aloft notwithstanding upbeat ISM consult data
  • Crude oil prices post largest daily decrease in 6 months
  • All eyes now on mins from Dec FOMC meeting

Gold prices finished a day with a medium gain. The steel plunged as a US Dollar jumped ceiling alongside benchmark US Treasury yields and SP 500 futures as better-than-expected production ISM data crossed a wires. A small 10 mins later, a markets topsy-turvy course. Gold rallied to event highs as yields, a greenback and batch futures tumbled.

The remarkable detonate of risk hatred extended to crude oil prices. The WTI agreement plunged alongside equities and a greenback carrying overwhelmed an 18-month high progressing in a day. It continued to float nearby event lows into a finish of day on Wall Street even as a yellow steel pared gains and USD recovered with bonds and Treasury rates.

A dissimilar trigger for a thespian about-face is not straightforwardly apparent. Erratic cost movement is not wholly surprising as liquidity rebuilds opposite a backdrop of portfolio balancing in a initial days of a trade year. That seems to be a many trustworthy reason on offer and hints that investors would be correct to sojourn medium in their expectations for trend expansion until appearance levels are rebuilt.

Looking ahead, a spotlight turns to a recover of minutes from December’s FOMC meeting. Besides a broadly approaching rate hike, a sit-down constructed an upgrade of policymakers’ growth and practice forecasts as good as a projection of 3 rate hikes in 2017, adult from dual envisioned in September. Not surprisingly, a markets review this as hawkish.

As noted previously, Chair Yellen attempted to play down this account (albeit unsuccessfully), observant the average rate trail envisioned by FOMC members steepened pleasantness of only a few contributing officials. She also stressed that most still depended on an capricious mercantile outlook. Alas, she was mostly abandoned as a perspective bearing a swifter tightening cycle that emerged after a US presidential choosing continued to reason sway.

A identical tinge in a Minutes request might authority courtesy this time around however, boosting gold. The implications for wanton oil might infer disastrous if markets get a clarity that a rosier expansion forecasts are fortuitous on a still-murky mercantile boost championed by a incoming Trump administration. The weekly EIA register upsurge information might mystify cost dynamics however.

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GOLD TECHNICAL ANALYSISGold prices continue to connect in informed territory. A daily tighten above a 23.6% Fibonacci retracement during 1166.51 targets a 1193.55-99.80 area (38.2% level, May 30 low). Alternatively, a spin behind next a 14.6% Fib during 1149.85 exposes a Dec 15 low during 1122.81.

Gold Prices May Extend Recovery on Dec FOMC Minutes

CRUDE OIL TECHNICAL ANALYSISCrude oil prices incited neatly lower, posting a largest daily decrease in 6 months. From here, a daily tighten next plane focus support during 51.64 exposes a 38.2% Fibonacci retracementat 49.80. Alternatively, pierce behind above a 14.6% Fib during 53.31 targets a Jan 3 high during 55.21.

Gold Prices May Extend Recovery on Dec FOMC Minutes

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

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