Phillip Futures Gold Daily Outlook - Gold may take its cue from a dovish Fed and could make its way back to the level of $1,200 in the near term.


Gold Price Movements
Gold prices rose yesterday, adding +0.3% to $1,185.6. As you would have guessed, most of the gains came across the FOMC session, which saw gold climbed to as high ass $1,189 on a sufficiently dovish set of FOMC economic projection materials. Gains tapered off towards the close of the session as American traders claimed profits before the Chinese traders’ entry.

The FOMC proved to be surprisingly dovish in their latest monetary statement. Although the median projection of rates remained between 0.5% to 0.75%, the most hawkish of estimates fell to 0.875% from 1.625% in March. Whereas four officials in March had the confidence to believe that rates should end above 1% in 2015, in June’s edition all officials felt that rates should end the year below 1%. Couple this with toned down economic projections, the Fed appears sufficiently and unambiguously dovish.

Movements across multiple asset classes all appear to unanimously believe that the Fed has turned dovish as well. The dollar slid, stocks gained (despite downward economic revisions); Treasury yields sunk while gold prices climbed. A dovish Fed typically has said effects on aforementioned asset classes respectively – but to witness them moving in such harmonic tandem confirms our view that the Fed’s confidence in raising rates is wavering.

Real time Gold Prices (Showing in China Beijing Timing)
This means that our anticipated drop in gold prices will have to wait a while longer, and that the big trend we are looking out for may not materialize in the near future. The end of Quantitative Easing in the US means we are unlikely to see climb to heights above $1,300 – but the monetary environment, with the record low interest rates – remain accommodative for gold. The Fed’s increased dovishness may yet push gold prices back to $1,200. In the meantime, we may have to continue dealing with gold’s sideway consolidation, with support/resistance at $1,160/$1,225. (Read Report)

Source : Phillip Futures Pte Ltd

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