Fed will raise rates 2018 & gold bullish on fed interest rates decision

Gold

14-06-2018 10:45AM

The price of gold has turned bullish and has made a session high as the dollar changes course and sells off. As expected, the Fed hiked rates by 25bps regardless of global risks. The gold price is now above the hourly moving averages. Projection is for 2.4% from 2.1% last with 4 rate hikes in 2018.

Key points to be noted from the meeting held:

The Fed observes 3 hikes in 2019 to 3.1% from 2.9%.

The Fed has raised their GDP viewpoint to 2.8% from 2.7%.

The Fed has lowered their unemployment to 3.6% from 3.8%.

The Fed notices core PCE by the end of 2018 at 2.0% from 1.9%.

The Fed observes PCE inflation at 2.1% from 1.9%.

Inference from Jerome Powell speech:

No comments on precisetransformation to the trade policy

Rates are likely to move closer to neutral level over the next year or so

It’s too early to declare victory on inflation

Press conferences to be held after each FOMC meeting from January onwards

Technical chart


Gold

Technical outlook

As expected by us, the same has been declared by FOMC. It has raised 25% paisa (from 1.75% to 2%). Wherein Fed statements indicate two more hikes, it plans to move 50% paisa before this year 2018. This particular statement will have a larger impact on the precious metal.

Gold prices trade on sideways momentum continues to trade below $1305. Gold short term 4H chart formed “bullish-rectangle-chart-pattern” In this pattern, prices are currently holding on nearby resistance place at $1302, which is a horizontal trend line.Once it breaks above, then the buyer will control the market leading towards $1312-1325 level. At the same time prices are struggling to travel above the $1305 level as the previous support became resistance trend line at $1305 which is considered as a significant barrier of the market.

Same parallel line support has been created at $1294. once it breaks below, then the prices will turn bearish extending towards $1288-1275.