Gold jumped yesterday after the Federal Reserve’s decision to cut interest rates by 0.5%. The decision was taken to anticipate any further economic impact from the coronavirus, but it did not have the reaction the bank may have hoped on stock markets as investors had already factored this during the previous trading session. Vice versa, this was significant news for bullion as not only will interest rates remain low for a long time, but the Fed also transmitted a sense of anxiety with this decision. After being so resilient in the last few months, the bank decided to cut by 0.5% in one shot. In other words, the Fed fears the impact the coronavirus is having and will continue to have on the economy.
Technically, there is now a first resistance level at $1,645 and a clear climb above this zone could open space for further rallies, while $1,600 and $1,575 remain the first two crucial support levels. We shouldn’t be surprised by further large movements on gold as it is now clear that volatility has come back with significant spikes seen in both stock markets and commodities in the last few days.
Chief analyst at ActivTrades and technical analyst for Italian newspaper 'La Stampa'. Carlo Alberto provides regular commentary for UK outlets including the BBC, Telegraph, the Independent Bloomberg & Reuters. He is also a weekly commentator for CNBC Italy and a columnist for La Stampa. He worked for Bloomberg as their Equity Research Fundamental Analyst before joining brokerage ActivTrades in 2011 to specialize in currency markets and commodities. In 2014 he published a 250-pages book on gold and the gold market, followed in 2018 by a new updated edition.
© 2019 High Leverage FX - All Rights Reserved.
© 2019 High Leverage FX - All Rights Reserved.