Gold price reached higher on Thursday despite Fed’s December hike.
The yellow metal moved in a range between $1,224.41 and $1,231.36/oz, before setting at $1,229.83/oz, up 1% compared with the opening price $1,224.22/oz.
Fig. Gold Price changes D1 Technical chart
Factors that cover on gold price
FED Rate Possibility
On November 17th, investors will turn their focus to Federal Reserve Chairwoman Janet Yellen’s testify before Congress’s Joint Economic Committee, an opportunity that the market could use to signal whether the central bank is likely to raise interest rates at its Dec. 13-14 meeting.
According to comments of top analyses, Yellen is more likely to talk about a chain of current outlooks as the unemployment rate has held steady near 5% this year or wages are increasing and inflation target is nearly achieving. The most bright point in Yellen’s testify may be growth situation of United State which rebounded in the third quarter after a consecutive decline in the first half of the year.
Fed rate hike depends much on the health of the US economy and inflation. Now, the expectation is quite high as US development economy is strong enough. Therefore, market analysts warned that the outlook for gold price remains cloudy in the near-term. According to Investing. com’ s Fed Rate Monitor Tool, the odds of a rate hike in December meeting currently is at 90.6%.
However, yesterday, the US Producer Price Index (PPI) in the past month published by the Bureau of Labor Statistics was 0.0% in October, lower than an expectation of a 0.3% increase in comparison with a reading of the same number in September. The core PPI, which excludes food and energy, fell 0.2% last month, compared to expectations for a 0.2% gain. These negative figures push gold price gained in Asia on Thursday as well as investors continued to support gold price despite a widely expected Fed rate hike next month.
On Wednesday (16/11) the Energy Information Administration (EIA) released its report for US crude and refined product inventories in the past week. The crude stockpiles in the US were 5.3 million barrels, jumped up sharply in the week ending on November 11, revising from a slight increase of 0.4 million barrels before. All these data pointed that the US supply is still at an overhang, dragging the “black gold” prices down. Indeed, the price of oil plays a crucial role in the determination of gold price. Because gold and crude oil are dollar-denominated assets, they are strongly linked. So, there is more likely to give a current gold price trend when oil inventories from the US jumped up. However, traders continued to weigh prospects of a coordinated production cut among major global oil producers on meeting in near-period that supports oil price today went up.
Fig. Crude Oil inventories by EIA
The Bank of Japan surprised markets this morning by announcing it would be dipping its toes into the bond markets by snapping up an unlimited amount of five-year and two-year bonds at fixed rates in the wake of a punishing global bond sell-off. The announcement is the first follow-up from Japan’s policymakers after a landmark decision to adopt a yield curve target, where the central bank is aiming to cap the 10-year bond yield at around 0%.
Earlier today, BoJ governor Haruhiko Kuroda told parliamentarians the central bank did not have to accept rising Japanese bond yields pushed up by a climb in US treasuries. The BOJ’s decision notice to the markets that it is closely monitoring developments as it tries to keep borrowing costs low to promote low inflation entering target 0%. In the eurozone, the European Central Bank also has a massive bond-buying program in place to help spur growth and inflation.
If BOJ’s decision is expected to set achieving inflation target and push growth, which will give a further insight about the future economy, currency market will be stronger prompting further falls in monetary demand for precious metals, weakening its price. However, selling pressure in gold price could be a long time when the financial market becomes more clearly.
Fig. GOLD Price D1 Technical Chart
On the daily chart, RSI (14), in spite of getting out of the oversold threshold for a couple of days, but still move near the level of 30. This implies that the bear’s flag covering gold price is rising high, matching with the red arrow by PFM signal Trend Indicator, suggesting short positions.
Fig. GOLD Price H1 Technical Chart
On the back of the US Election 2016, the yellow metal created its longest stretch as stumbling from swing high of $1337.17/oz to swing low of $1211.42. Since November 14th, gold price is gradually crawling up and in an attempt to catch the Fibonacci 23.6%. For the rest of today this day, this level is supposed to be reach, thereafter, the commodity will fall back down, resuming its bearish trend.
Analyses of Group Fiinvesting
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