Fed, Iraq Set Positive Tone For Gold
Today’s Spotlight Market
Gold futures are higher this morning, bolstered by a slightly more dovish statement from the FOMC. The Fed’s policy statement was hardly surprising to most traders in terms of trimming asset purchases and rate policy. The central bank’s asset purchase program was reduced by another $10 billion, which was in line with expectations. The Fed also went out of its way to emphasize that it plans to keep interest rates low long after the asset purchase plan ends.? Additionally, the bank plans to very gradually raise rates in the future.
Fundamentals
In addition to the very favorable FOMC policy statement, Gold futures are being supported by the conflict in Iraq. There are reports of a major Oil refinery being overrun in the northern city of Kirkuk. The fear premium in Gold prices may continue to rise if ISIS forces cannot be contained. The US Dollar Index has also fallen to its lowest level this month, stoking demand for the metal. Precious metals as a whole have also gotten support from the extended labor turmoil in South African Platinum mines.? Companies hope to negotiate the terms of a new agreement, which would end 21 weeks of unrest. The two sides are said to be far apart on pay.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the August Gold contract climbing after forming a relative low to begin the month. Prices are now trading near resistance at the 1285 level.? August Gold is entering an area with heavy chart congestion, which could slow the metal’s ascent.
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