Commodities | Mar 26 2015
By Walter England and Kara Dailey
- Gold prices jumped on cautious FOMC statement ,rising further on subpar economic data
- US Durable Goods Orders & New Homes Sales missed the mark while annual inflation fell flat
- Gold breaks from is descending trendline
Gold prices ascend for a 6th consecutive day as the prospect of a U.S. rate increase becomes less imminent and the pace of hikes less urgent. Ignited by a cautious FOMC statement last Wednesday, the rise has since been supported by diverging economic data in the U.S. and subsequently a weaker U.S. dollar.
The initial dollar index drop resulted from a change in the Federal Reserve’s forward guidance. Despite removing the term “patience”, the overall tone of the statement aired on the side of caution. With a slowdown in the housing sector and weakened export growth the committee explicitly stated that raising the rate will be an unlikely scenario at the April meeting. They further expanded stating that even after employment and inflation are near mandate levels, economic conditions may warrant keeping the federal funds rate below normal levels for some time.
The ensuing index tumbles have resulted from this week’s off-the-mark economic indicators. U.S. Durable Goods Orders fell short in February, declining from 2.0 to 1.4%—well below the expected value of 0.2%. Existing home sales also faltered coming in at 1.2 vs. the expected 2.0 percent. As a final influence, the annual inflation rate fell flat in February at 0.0%—a considerable distance from the targeted 2.0%.
Consequently, over the same time span in which gold prices rose, the US dollar Index fell just over 2.0 percent. The drop has left price approaching the former resistance turned support level—near 1187. Given that gold is priced in US dollars, this change in the US dollar index has made the precious metal a more attractive investment. In breaking above resistance, gold has traded as high as $1,199.
Reprinted with permission of the publisher. The above story can be read on the website www.dailyfx.com at this link.
The views expressed are not by association FNArena's (see our disclaimer).
For real time news and analysis, please visit http://www.dailyfx.com/real_time_news
DailyFX provides forex news on the economic reports and political events that influence the currency market. Learn currency trading with a free practice account and charts from FXCM.
www.dailyfx.com
Disclaimer
Forex Capital Markets is headquartered at Financial Square 32 Old Slip, 10th Floor, New York, NY 10005 USA.
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before you decide to trade the foreign exchange products offered by Forex Capital Markets, LLC, Forex Capital Markets Limited, inclusive of all EU branches, FXCM Asia Limited, or FXCM Australia Limited, any affiliates of aforementioned firms, or other firms under the FXCM group of companies [collectively “FXCM Group”] you should carefully consider your objectives, financial situation, needs and level of experience. If you decide to trade foreign exchange products offered by FXCM Australia Limited you must read and understand the Financial Services Guide and the Product Disclosure Statement. FXCM Group may provide general market information and commentary which is not intended to be investment advice and the content of this email must not be construed as personal advice. By trading, you could sustain a total loss of your deposited funds and therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading in foreign exchange products. Foreign exchange products are only suitable for those customers who fully understand the market risk. FXCM recommends you seek advice from a separate financial advisor.
FXCM Group assumes no liability for errors, inaccuracies or omissions in these materials and does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FXCM Group shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation losses, lost revenues, or lost profits that may result from these materials. This email is not a solicitation to buy or sell currency. All information contained in this e-mail is strictly confidential and is only intended for use by the recipient. All e-mail sent to or from this address will be received by the FXCM corporate e-mail system and is subject to archival and review by someone other than the recipient.”
Technical limitations
If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.
