Saturday, 20 April 2019
Jakarta
--:--
Tokyo
--:--
Hongkong
--:--
New York
--:--

Fed Meeting Will Not Be The Spark To Push Gold Prices Higher - Analysts
Monday, 18 March 2019 15:30 WIB | GOLD CORNER |Gold OutlookGold Corner

Once again the gold market is eking out a weekly gain as prices trade around the critical psychological level of $1,300 an ounce. However, according to some analyst, the market lacks a catalyst to push prices to last month's 10-month high.

Although down from its highs, the market is still preparing to the week with most gains last week, with April gold futures last traded at $1,302 an ounce, up 0.21% from the previous week.

Ole Hansen, head of commodity strategy at Saxo Bank said that Thursday's 1% decline shows that the market is lacking conviction for higher prices. He added that resilience in equity markets is making gold a less attractive alternative for investors. The S&P 500 has broken above the psychological level at 2,800, last trading at 2828 points, up 3% from the previous week.

"Right now there appears to be no major need for an insurance policy so investors are shunning gold and turning to equities," he said. "I think there is growing frustration among gold investors and that is weighing on prices."

The question now on many market players' minds is what will be the catalyst to drive gold; according to some analysts anyone expecting a dovish Fed to be the spark to ignite a rally could be sorely disappointed.

It's All About The Fed

Once again all eyes will be on the Federal Reserve as it holds its monetary policy meeting this week and along with its interest rate decision will release updated economic projections. Economists are also expecting the central bank to unveil its plan to top its balance sheet reduction program.

"The median growth projection looks certain to be revised down," said economists at Capital Economics.

However, according to some analysts, these expectations are already baked into the market.

"I think the Fed pause story is largely played out," said Ryan McKay, commodity strategist with TD Securities. "Ultimately, if gold is going to go higher we need to see weaker U.S. data. The U.S. economy still appears strong compared to the rest of the world and that is keeping the U.S. dollar bid."

Although the central bank is expected to downgrade their growth and interest rate forecasts, Jasper Lawler, head of research at London Capital Group, said that he does not expect the Federal Reserve to be anywhere near dovish as the European Central Bank was two weeks ago when it surprise markets with a shift in its forward guidance, not expecting to see any rate hike until at least the end of the year.

Lawler added that there is a risk that the Fed sounds hawkish as it downplays a potential slowdown in the domestic economy.

"If the Fed says that it's adjusting its growth because of risks in the global economy or anything along those lines that could make them sound a little hawkish," he said.

Hansen added that a goldilocks outlook from the Fed -- not too hot and not too cold -- will also keep a bid under equity markets, which will cap any rally in gold.

Gold Will Still Keep It's Head Above Water

Although the Federal Reserve is not expecting to be dovish enough to drive gold prices higher, analysts are still not ready to give up on the yellow metal just yet.

Lawler said that the trend in gold is still higher as he sees sticky support around $1,280 an ounce. He added that gold remain an attractive safe-haven asset as global economic uncertainty builds.

"Overall there is still strong appetite for gold," he said. "I expect that any significant drop in gold prices will attract new buyers."

Hansen said that although there is technical bearish threats building in gold, it difficult to see prices falling significantly lower.

"There are still a lot of reasons to hold gold so I don™t see much downside either," he said.

Hansen added that he continue to remain long-term bullish on gold as long as prices hold above the key retracement level around $1,275 an ounce.

McKay also said that he sees limited downside for gold because of the global economy. Although U.S. economy remains resilient to outside threats, it can't remain strong on its own.

"At this point in the growth cycle a slowdown is natural," he said. "But if something breaks in China and Europe that will impact U.S. growth as well. On the back of slowing global economy, I don't see a lot of reasons to be overly bearish on gold."

Technical Risks To Watch

Although Hansen is long-term bullish on gold, he said that he is watching gold's technical closely as the price action is creating a bear flag formation.

"If we break below the recent lows at $1,290, we could see a sharp selloff," he said.

Source: Kitco News

RELATED NEWS
Wall St., Main St. Look For Gold Prices To Tick Higher...
Monday, 8 April 2019 12:06 WIB

Blok suara terbesar di Wall Street dan Main Street menantikan harga emas untuk naik selama minggu ini, menurut survei emas mingguan Kitco News. Tiga belas profesional pasar mengambil bagian dalam sur...

Gold Ekes Out 1.3% Gains For Q1 2019...
Monday, 1 April 2019 15:14 WIB

œKesabaran telah menjadi mantra terbaru bagi investor emas karena logam kuning telah berjuang untuk menemukan momentumnya sementara kuartal pertama 2019 telah berakhir. Harga emas mencari untuk ...

Wall St. Bearish, Main St. Bullish On Gold Prices...
Monday, 4 March 2019 14:52 WIB

Wall Street dan Main Street sedikit terpecah kemana arah tujuan emas pada minggu ini, menurut survei emas mingguan Kitco News. Blok terbesar pemilih Wall Street menyerukan harga yang lebih rendah, se...

Wall St., Main St. Still See Gold Bull Running Strong...
Monday, 25 February 2019 16:52 WIB

Wall Street dan Main Street dengan tegas mengungkapkan bullish pada emas dalam waktu dekat karena logam mulia menunjukkan kenaikan kuat pada pekan lalu, mencapai puncaknya pada level tertinggi 10 bula...

Wall St., Main St. Bullish On Gold, See End Of Road For USD...
Monday, 18 February 2019 15:47 WIB

Wall Street dan Main Street tetap bullish dalam survei emas mingguan Kitco News. Sejumlah analis dan pedagang mengutip ekspektasi bahwa reli dolar AS baru-baru ini akan terhenti, yang akan membantu e...

LATEST NEWS
Dollar steady near 2-week high in quiet Good Friday trading

The U.S. dollar is holding near a two-week high on Friday, on what should be a quiet session for currencies with most other major U.S. and global exchanges closed for the observance of Good Friday. The ICE Dollar Index, a measure of the...

Housing starts decline 0.3% in March vs +6.5% expected

According to the data published by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, housing starts in March declined by 0.3% and came below the market expectation for a growth of 6.5%. Nevertheless, the US Dollar...

Russian Ambassador in Caracas Rejects Monroe Doctrine Revival

As Venezuela's reliance on Russia grows amid the country's unfolding crisis, Vladimir Putin's point man in Caracas is pushing back on the U.S. revival of a doctrine used for generations to justify military interventions in the region. In a rare...

POPULAR NEWS
Gold futures end at lowest since December, down 1.5% for the week
Friday, 19 April 2019 01:29 WIB

Gold futures posted a modest decline on Thursday, to tally a loss of 1.5% for the week. "U.S. dollar strength, enhanced not only by economic data...

Gold Tips Higher as Stocks Ease, But Hovers Near 2019 Low
Thursday, 18 April 2019 19:07 WIB

Gold futures scratched higher Thursday, reflecting bullish investors™ attempt to stop this week™s slide ” a move that drove the metal to 2019...

Hong Kong Stocks End Week on a Low Note (Review)
Friday, 19 April 2019 03:26 WIB

Hong Kong stocks ended the week down Thursday, in line with an Asia-wide retreat and following losses on Wall Street, as investors wound down for a...

Gold Heads for 4th Weekly Drop as Trade Deal in Sight
Thursday, 18 April 2019 16:07 WIB

Gold headed for the longest run of weekly declines in eight months amid speculation the U.S. and China are nearing a trade deal and as data...