Investors are hoping for the rate hike pause implemented by the Federal Reserve to continue into the July FOMC meeting. Last month after 10 consecutive rate hikes at each FOMC meeting the Federal Reserve left their benchmark interest rate between 5% and 5 ¼%. Statements by Chairman Powell along with multiple Federal Reserve members underscored that this was not a signal that the Federal Reserve would mark this occasion as the beginning of a more accommodative monetary policy.
Recent data suggests that the Fed's action has done just that after two reports confirmed that the growth of inflation has been curtailed. Both the CPI which was released last week and the PPI just released have indicated that inflationary pressures are weakening with both reports coming in below expectations.
Last week's CPI index report for June was believed to be a potential inflection point for the Federal Reserve confirming that their aggressive monetary policy has taken effect and dramatically contracted the economy. According to MarketWatch,"Data Tuesday showing weaker U.S. retail sales and industrial production data further fueled expectations for an end to the Fed's rate-hiking cycle, causing Treasury yields to fall, which in turn"helped to support low- and zero-yielding assets, like gold and silver," Razaqzada said in a market update."Today gold futures opened at $1958.30 just below its 100-day moving average which is currently fixed at $1960.90.
This puts the next level of resistance at $2000 per ounce. This is based on a top created on June 5 when gold prices reached that key psychological level before correcting down to $1900 per ounce on June 29. Above that price point, major resistance occurs at the 23.6% Fibonacci retracement at $2020 per ounce.ByFollow @garyswagner gary@thegoldforecast.com www.thegoldforecast.com