Daily Brief, Sept 16 – Bullish Bias in Gold Continues – All Eyes on the FOMC and Fed Fund Rate!  - Forex News by FX Leaders

Daily Brief, Sept 16 – Bullish Bias in Gold Continues – All Eyes on the FOMC and Fed Fund Rate!

Posted Wednesday, September 16, 2020 by
Arslan Butt • 3 min read

Good morning traders,

Prices for the yellow metal GOLD closed at 1,954.10, after placing a high of 1,972.10 and a low of 1,948.32. Overall, the movement of gold remained bearish throughout the day. The gold prices slipped on Tuesday, amid the latest ruling that US tariffs on Chinese products are illegal. The statement raised the safe-haven appeal for the US dollar and weighed on the prices of the yellow metal.

On Tuesday, the World Trade Organization ruled that the tariffs imposed on Chinese products by the US in 2018, which triggered the trade war between the two mega economies, were inconsistent with international trade rules. The organization said that the US had not provided any evidence that its claims regarding China’s unfair technology theft and state aid justified the border taxes.

In response, the US said that this only demonstrated that the WTO was utterly inadequate for the task of confronting China. America’s top trade negotiator, Ambassador Robert Lighthizer, said that the US must be allowed to defend itself against unfair trade practices. At the same time, Chinese officials welcomed the ruling. The US dollar, which has somehow become a default player for the US-China dispute, despite the wider appeal of gold as a safe-haven, immediately rose after the news, weighing heavily on the prices of the precious metal.

Apart from this, on the data front, figures released at 17:30 GMT showed that the Empire State Manufacturing Index for September rose to 17.0, against the projected 6.2, supporting the US dollar, whilst exerting pressure on gold prices on Tuesday. The Import Prices from the United States for August, which were released on Tuesday, also advanced to 0.9%, compared to the expected 0.5%, boosting the US dollar and adding further pressure to the gold prices.

On the US stimulus package front, House Speaker Nancy Pelosi said on Tuesday that she was still opposed to the Republican efforts to pass a reduced version of her party’s coronavirus stimulus plan. Upon asking whether she will be willing to pass a skinny deal now, and reconvene with Republicans on outstanding issues later, she refused, saying that she would wait no longer for the Trump administration. She added that this was the opportunity to do something, and the skinny deal was a Republican bill and not a deal.

Pelosi reiterated that the American economy is a consumer economy, and the more they have, whether its food stamps or unemployment insurance, the more the economy will be stimulated. This also weighed on the market sentiment because, given Pelosi’s comments, the chances of reaching consensus on the size of the stimulus package are not in sight.

On the coronavirus front, the popularity of the US is plummeting worldwide, amid the widely criticized response to the coronavirus. A survey by the new Pew Research Center found that the United States was viewed positively by only 34% of those surveyed in 13 countries worldwide. President Donald Trump ranked even lower, on the back of the country’s response to handling the coronavirus pandemic. The way US President Donald Trump dealt with the situation was ranked lowest of any major government response to COVID-19. This weighed on the US dollar and capped any further losses in the gold prices on Tuesday.

Daily Technical Levels

Support              Resistance

1,953.74              1,980.54

1,941.27              1,994.87

1,926.94             2,007.34

Pivot Point:      1,968.07

Trading in the precious metal, gold, was sharply bullish, on the back of the weaker US dollar, trading at the 1,961 level. On the higher side, bullish trading of the gold prices may continue until 1,970, with resistance levels of 1,985 and 1,994. On the lower side, the XAU/USD may find support at levels of 1,963 and 1,955. Overall, the trading bias seems bullish. Let’s brace for the FOMC and Fed Fund Rate decisions, to determine further trends in the market. Good luck!

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies

About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
Related Articles
WTI crude oil prices registered a 3-day of losing streak and trading largely unchanged on the day near below $39.50 level, having hit the...
4 hours ago
Comments

Leave a Reply

avatar
  Subscribe  
Notify of