As I was about to publish this blog, Brussels was rocked by multiple explosions that left many dead and wounded. My heartfelt condolences to their families in these challenging times of despair!
Gold is known for its safe haven appeal and the same has been proven once again. A quick rise of nearly US$20 proved that traders and investors would flock behind Gold to protect themselves from unknown strikes and calamities.
Moreover since the Global downturn, the precious metal has risen by nearly 13-month high.
I did mention in my last blog that I do expect some corrections before the next up move and we all witnessed the same before the FED meeting. The FED meeting on Wednesday did conclude that the global risks pose a threat to the US economic recovery.
The U.S. central bank held interest rates steady on Wednesday and indicated it would tighten policy this year, but fresh projections offered by the Fed showed policymakers expect two quarter-point increases by year-end, half the number forecast in December. Expectations that the Fed would raise rates steadily this year had faded since the bank’s initial hike in December, as concerns about global growth roiled financial markets.
It decided to scale back the number of planned rate rises this year to two from four, which initially spurred the precious metal to a one-week high while bond yields and the dollar fell and equities made up some lost ground.
Spot gold was down 0.31 percent at $1,253.99 an ounce during Fridays trading hours though the yellow metal closed on a positive side and was up around 0.4 percent on the week. Gold edged down on Friday, as the dollar steadied above a five-month low, but the metal remained on track for a weekly gain after the Federal Reserve scaled down rate hike expectations.
Inflation is a very important economic number that the FED is watching closely. Until it is below their target of 2%, there won’t be much room for FED with the rate hike policy. Unemployment, according to FED is back on track.
Commitment of Traders report that was realized on Friday, showed Gold and Silver ETFs have seen continued interest and strong buying has been the trend. Gold holdings increased by 915’000 ounces in just two days, while Silver added 3 Mio. ounces as per the report.
With the Easter holiday around the corner, buying interest would mute from here on until further developments on the Brussels’ incidence.
A support of $1230 and a resistance of $1270 do play strong price levels for Gold’s next move while Silver price levels would be supported by $15.20 and a key resistance of $16.70.