Trading the Range Between 2 MAs in Gold After the FED, ECB and BOJ
Gold has been trading in a range between two moving averages for more than a month as uncertainty prevails
Gold reversed lower after failing to break above the record high in early May, but has been finding support at moving averages. On Thursday morning we saw a false breakout of the 100 SMA (green) on the daily chart, but it managed to rebound from its lows after the US Dollar reacted to the rate decisions made by the FED and the European Central Bank this week. The fall in Gold prices resulted in a break below an ascending trendline and a test of support levels within the range of 1,936 to 1,945. This move raises several questions about the future direction of Gold.
So, the downside seems protected by the 100 daily SMA but, which has been providing support on many occasions. Although at the top we have the 50 SMA (yellow) which has been acting as resistance. This moving average rejected the price on Friday after some hawkish comments by the FED. So, right now the future of GOLD is uncertain and we will try to trade the range, buying at the 100 SMA nd telling at the 50 SMA.
FED’s Semi-annual M0netary Policy Report
- Bringing inflation down will require period of below-trend growth
- Inflation well above target, labor market very tight
- Some indications of future business defaults are elevated
- Financial conditions have tightened since January
- Will adjust pace of balance sheet contraction if needed
- Outlook for Fed funds rate subject to ‘considerable uncertainty’
This is a preview of what Powell will be saying in his June 22 Humphrey Hawkins testimony.
- It’s disturbing that core inflation isn’t moving, will probably require more tightening
- Core inflation is not coming down ‘like I thought it would’
- So far it looks like the idea of labor market softening without much rise in unemployment is ‘holding up’
- US economy is still ‘ripping along’
- Right now everything ‘seems to be calm’ in the banking system
- Global spillovers from expected from coordinated central bank tightening have to really materialized
- It’s still not clear that recent bank failures have had a material effect on credit conditions
- Monetary policy should not be altered due to ‘ineffectual management at a few banks’
- It’s the Fed’s job to use monetary policy to fight inflation; the job of bank leaders is to manager interest rate risk
There’s nothing on the June meeting yet or outlook for July but you can see the hawkish bent from the banking comments.
Gold Live Chart
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
Related Articles
Comments
Sidebar rates
Related Posts
Save
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals