Gold Benefiting As USD Sees No Love After FOMC - FXTM
(Kitco News) - Gold is on the defensive, but thestill-soft U.S. dollar is likely to cushion the downside for gold, says FXTM.
Around 8 a.m. EST Thursday, spotgold was down $5.05 to $1,339.50 an ounce, while the euro was up to $1.2454from $1.2413 late Wednesday. Lukman Otunuga, research analyst at FXTM,commented that gold eased after a Federal Open Market Committee meetingWednesday in which policymakers hinted of more rate hikes taking place thisyear.
“While further losses could bewitnessed in the short term, a vulnerable U.S. dollar is likely to cushion theyellow metal’s downside,” Otunuga said.
Gold remains bullish on the dailycharts and is poised to venture higher if Friday’s U.S. nonfarm payrolls reportfalls short of market expectations, the analyst continued. Expectations are forjobs growth of around 185,000.
“From a technical perspective,gold remains in the process of creating a new higher low,” Otunuga said.“Sustained weakness below $1,335 may invite a decline back towards $1,324.15.Alternatively, an intraday breakout above $1,340 may open a path towards$1,360.”
Turning to the U.S. dollar,Otunuga, noted that despite a hawkish tilt in Wednesday’s monetary policystatement, the greenback is still suffering because of uncertainty about central-bankpolicy and geopolitical worries.
“As [Fed Chair] Janet Yellenprepares to pass the baton of leadership to Jerome Powell, there are widespreaddiscussions over how this will impact the dollar, current monetary policy andthe U.S. economy,” he said. “While it may be too early to predict how the FOMCunder Powell’s leadership could impact the U.S. economy, it obviously breedsuncertainty, resulting in a weaker dollar. Other themes that continue to punishthe dollar revolve around political uncertainty in Washington and concerns overthe United States’ stance on global trade.”
By Allen SykoraFor Kitco News
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