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XAUUSD - Retreats Back under $1500 as Focus Turns to Fed

   

 

XAUUSD - Retreats Back under $1500 as Focus Turns to Fed
 
In the last week gold has fallen sharply from its multi year highs above $1550 down back below the current key level of $1500. In the last month or so gold has enjoyed considerable support from $1500 which allowed it to push higher in the last two weeks to achieve a six year high above $1550 before the recent drop. Significantly, gold has just fallen below this level which has so ably supported it in the last month so it will be closely monitored to see if it can quickly move back above $1500 or if it starts to meet resistance at this level.

At the start of August, gold surged higher off support at $1400 towards the recent six year high above $1530, before its more recent surge higher yet again.

It was well supported by the $1400 level throughout July, and any time it has moved lower, it has been quickly bought up and supported, pushing it back above this level. If gold was to decline from its current highs, you could reasonably expect it to receive support from $1400 again. In late June, gold enjoyed a strong surge higher through resistance at the $1350 level, which had been repelling prices despite multiple rallies to push through that level, after having provided stiff resistance to gold on numerous occasions in the last couple of years. The $1350 level is also likely to offer support to gold should it decline from its current levels.

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.

St. Louis Federal Reserve (Fed) President James Bullard has been outspoken this week about what he believes the Fed should do to align itself with market expectations. He believes the Fed should cut interest rates by 50 basis points in two weeks time at its next meeting as the market is expecting it. In July, the Fed reduced borrowing costs by a quarter point, its first rate cut since 2008. It is rare for central bank officials to admit that financial markets should dictate policy, however “in this situation I would respect the market signal,” Bullard said. “We should have a robust debate about moving 50 basis points at this meeting...It’d be better in my mind to go ahead and get realigned right now,” rather than moving only a quarter point in September and again in October. Meanwhile US President Trump has been critical of the Fed, which he blames for slowing the economy, in their inaction on interest rates suggesting they need to be lowered. He also called Fed officials “boneheads” in the tweet.

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