Gold prices are back in positive territory after the Federal Reserve sent another dovish signal to markets, lowering its growth forecast and signaling no rates hikes in 2019.
Spot gold gained 0.2% to 1,314.87 USD per ounce, having earlier touched a peak since February 28 at 1,320.22 USD and could soon probe the resistance at 1,321 USD per ounce.
Meanwhile, the US gold futures rose by 1% to 1,314.60 USD per ounce.
The Fed’s decision on interest rates seriously supported the gold. Lower interest rates tend to pressure the US dollar and bond yields, making greenback-denominated gold less expensive for holders of other currencies and increasing the appeal of non-yielding assets such as bullion. Gold prices have gained over 13% since touching more than 1-1/2 year lows in August last year, mainly driven by a dovish Fed, global growth concerns and geopolitical worries.
It is worth noting that precious metals markets first began turning up the heat on the Fed to dial back rate hikes in November and by mid-to-end December, the rates markets had already priced in a pause for 2019. This is evident from the fact that gold picked up a strong bid around 1,200 USD on November 13 and was trading near 1,300 USD per ounce in the first week of December.
The SPDR Gold Shares and SPDR Gold MiniShares gained as the dollar fell. SPDR Gold Shares gained 0.65% while SPDR Gold MiniShares rose by 0.61%. The Invesco DB US Dollar Bullish fell by 0.58%.
Other precious metals are also on the rise. The price of palladium rose to a fresh record high of 1,620.53 USD per ounce on sustained supply deficit amid increased demand for the autocatalyst metal. Platinum marks its highest level since March 1 at 871.66 USD per ounce. Both were supported by the risk of a ban on exports of precious metals scrap and tailings from the major producer Russia. Thus, palladium and platinum extended their gains to a record high.
Silver, meanwhile, gained about 0.7% to 15.56 USD per ounce.
Risk appetite in the world marketplace remains upbeat, as there are no major geopolitical matters moving the world markets. This has been a constraining factor for price advances in the safe-haven gold and silver markets.
Gold price analysis
Gold ended up creating a bullish outside-day yesterday and is currently trading just above yesterday’s high of 1,317 USD per ounce. On the daily chart, the metal has found acceptance above the 50-day moving average and the 5- and 10-day MAs are trending north, indicating a bullish setup. The 14-day relative strength index (RSI) is biased bullish with an above 50.00 print and is pointing north.
On the 4-hour chart, the metal confirmed an ascending triangle breakout with a move above 1,310 USD earlier today.
So, the path of least resistance appears to be on the higher side. That said, a convincing break above 1,321 USD (61.8% Fibo rate of 1,346.75/1,281.01 USD) may remain elusive as the rate hike pause signaled by the Fed may have been priced in by the markets over the last four months.
However, the recovery of the greenback, making it difficult for gold to cross 1,321 USD. The outlook, however, would turn bearish only below 1,300 USD. Also, a break above 1,321 USD would bolster the bullish setup on the daily chart and could yield a rally toward 1,340 USD, although that looks unlikely.