We have seen not only the Forex market affected by the FED’s monetary policies, but the commodity markets have also reacted. With the FOMC meeting minutes release expected tomorrow evening at 20:00 SAST the commodity market is expected to see volatility filter through.
Gold (XAU) has been the commodity of choice of late as a safe haven and depending on the outcome of the meeting minutes we might see the precious metal react once more. The price of Gold (XAU) has had a stellar run this year reaching highs last seen in 2013 as global recession fears grew stronger.
Gold stocks on the Johannesburg Stock Exchange (JSE) and other major Indices have also reacted to the momentum in the yellow metal. As of Monday, market close the Gold miners on the JSE have led the charge with Sibanye (SGL) up 59.88% YTD, Harmony (HAR) gained 27.98% YTD And DRD Gold (DRD) with 37.7% YTD.
Gold continued to edge lower on Tuesday morning mainly due to recovering Bond yields and the U.S Dollar (USD) reaching new multiweek highs.
All eyes will be on FED chair Powel tomorrow as he testifies in front of the Joint Economic Committee, in Washington DC around 16:00 SAST. Market participants will listen closely to what the FED chair has to say about the economic outlook and recent monetary policies.
Some technical points to look out for on Gold (XAU):
- Gold’s price action has been consolidating between the $1440/ ounce technical resistance and $1383/ ounce support levels.
- We might see a double top technical formation playout if the support level does not hold.
- The Relative Strength Index (RSI) has also retraced from overbought levels and a failure swing is also visible.
Source - Bloomberg
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