Trump Impact
Gold prices are attempting to stabilise today following the heavy selling we saw yesterday in reaction to news of Trump’s election success. A strong rally in USD saw gold prices falling sharply with gold futures currently down around 5% from the YTD highs. Looking ahead, there is room for gold prices to fall further if we see a continued rally in USD. Such a rally is likely to come if, for example, we get confirmation that the Republican party has won The House as well as the Senate, giving Trump a clean sweep. Today, however, the focus will shift temporarily to the Fed with the November FOMC decision due later.
Fed Expectations
The Fed is widely expected to cut rates by a further .25% today. However, in light of the US elections result, the focus now will be on whether the Fed signals further easing is likely to come before year end. The market is currently pricing in a roughly 66% chance of a December cut. If this pricing drops in response to the Fed’s outlook tonight, USD will likely turn higher again, putting gold under fresh selling pressure. On the other hand, if the Fed keeps the focus on the recent drop in US labour market data and keeps December rate-cut expectations alive, USD should continue to soften here allowing gold some room to move higher.
Technical Views
Gold
The sell off in gold has seen the market breaking down below the 2,684.76 level and the bull channel lows. While below here, risks are skewed towards further downside, in line with bearish momentum studies readings, with 2,604.65 the next support to watch.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.