Gold inched up on Thursday, holding near a multi-month peak after the US Federal Reserve paused its monetary tightening cycle, denting the dollar and putting bullion on track for its fourth straight monthly gain.
Gold price rose to an 8-month high, traded this morning at 1,322 USD per ounce. The highest level reached by metal yesterday was at 1,324 USD per ounce, this was the highest level since May 11, 2018. From the beginning of the month, the spot price of gold added nearly 3%.
February futures aside, Comex’s most-active gold contract for April settled up by 3 USD at 1,315.50 USD per ounce, after making a session peak at 1,320.80 USD. The rally came ahead of the monthly meeting of the Federal Reserve which kept interest rates unchanged as widely expected.
The Federal Reserve reaffirmed its commitment to be patient in terms of interest rates. This pushed down the US dollar and led to an increase in gold prices. Gold has a tendency to appreciate with expectations of lower interest rates, which reduce the cost of holding gold bullion. The price of gold is supported by both the Fed’s decision on interest rates and the US-China trade talks. This will keep the prices above 1,300 USD for a while, but the resistance at 1,350 USD will be difficult to overcome.
Spot Gold has risen by nearly 14% of its lowest value. The volatile stock markets and political uncertainty were the main factors contributing to the strong performance of the precious metal.
The strong interest in gold has led to the highest stocks of gold for the SPDR Gold Trust, the world’s largest stock-exchange gold fund, since June. Gold stocks of the fund rose by 4.6% this month, which was their biggest monthly increase since September 2017.
Other precious metals are also on the uptrend, with the palladium trading at 1,360.50 USD. Silver is traded at just over 16 USD per ounce after reaching levels of 16.10 USD yesterday. Platinum is traded at levels of about 815 USD per ounce.
Gold price technical analysis
During the trading yesterday, the price of gold futures rose from 1302.76 USD to 1303.10 USD per ounce. This morning it traded at levels 1303.54 USD.
If the price of gold overcomes the resistance range of 1,305.72-1,306.45 USD per ounce, it will target reaching and testing the zone 1,308.33-1,308.70 USD per ounce. Upon success, the upward trend will continue to 1,312.41-1,313.14 USD per ounce.
If the gold falls below the support zone 1,299.76-1,299.03 USD per ounce, then the next support will be the zone 1,295.32-1,294.95 USD per ounce. In the case of a breakthrough, the downward trend may continue to 1,293.07-1,292.34 USD per ounce.
Silver price technical analysis
Silver pushed through the mid-term trend support as we submit this write up. That is the upper boundary of the darker grey trend channel in the very first chart below. The breakout attempt got confirmed by gold as well. Both precious metals broke through their respective downside trend supports that dominated price action since 2011. That is a cross-market confirmation signal, which is constructively bullish. However, a breakout is not a done deal yet. Trend breaks of larger degree trends are most often not a hit and run event. They tend to get retested before a breakout gets confirmed. The actual breakout usually unfolds after a retest.
From the technical perspective, Silver recovered more than 60% of the losses seen last year, following a strong movement since the mid of December. It is currently trading decisively above 20- and 50-week SMA.
A decisive break of 16.00 USD level could open the doors to the 76.4% Fib. level from June’s peak, at 16.50 USD. On the breach of this area, the pair could find the next real Resistance at 17.24 USD hurdle.
In case of short term corrections to the downside, immediate Support stands at 20-day MA and 50% Fibo level at around 15.50-15.60 USD.