XAUUSD - Remains Near Six Year High Above $1415 as All Eyes on Fed

Leading up to its recent range below $1350, gold surged higher to move sharply away from the key $1270 level, through any resistance at $1300 and to a then one year high just shy of the $1350 level. It had been content for the week or so prior to enjoy support from the $1270 level, a level which had ably support the precious metal for the last six weeks or so, despite its best efforts to push lower.

In May gold surged higher to its highest level in a month reaching and testing the key level of $1300 before declining again back to $1270 and for the best part of April and May, gold consolidated and traded between $1270 and $1300, before its recent surge and departure from this trading range. Earlier in April, gold fell sharply from sitting just above the key level of $1300 to fall to a new low for 2019 just below $1270, where it received solid support from.

The $1300 level has played a significant role with gold in the last few months and has more recently offered strong resistance to any movement higher. This level will be likely to offer some support now should gold return back below the $1350 level. Earlier in February, gold was cruising along pushing to new nine-month highs on the back of solid support from the key $1300 level, before crashing lower pushing through any support at the $1300 level and starting to challenge any support at this level.

Last month the Federal Open Market Committee (FOMC) voted 9-1 to keep the benchmark rate in a target range of 2.25% to 2.5%. Despite cautious wording in the post-meeting statement, financial markets are still betting and almost demanding the U.S. Federal Reserve (Fed) cuts rates soon, even as early as this month. The central bank predicts one or two rate cuts in its set of economic predictions, but not until next year. During his post meeting press conference, the Fed Chairman Mr Jerome Powell said, “Many participants now see the case for somewhat more accommodative policy has strengthened.” Non-voting Cleveland Fed President Loretta Mester has more recently said she holds a “positive baseline outlook” on the economy although she is monitoring risks to determine the central bank’s next move. “At the present time, I believe it is too soon to make that determination, and I prefer to gather more information before considering a change in our monetary policy stance,” Mester said, noting that the expansion has proven “resilient to a variety of shocks, headwinds and uncertainties” that ultimately have reversed.