NEW YORK (Scrap Register): A less-hawkish-than-expected Federal Reserve resulted in a softer U.S. dollar that in turn has underpinned gold, said Lukman Otunuga, research analyst at FXTM.
Spot gold Wednesday traded as high as $1,335.80 an ounce, a two-week high, before backing off slightly Thursday and trading at $1,329.20, a loss of $2.65 for the day.
“It’s remarkable how gold prices soared on Wednesday despite the Federal Reserve raising interest rates,” Otunuga added.
The reason behind gold’s incredible rebound could be linked to the fact the Federal Reserve was less hawkish than anticipated, which simply weakened the dollar.
With the dollar tumbling after the U.S. Federal Reserve disappointed investors, gold found itself back in fashion. The yellow metal could build on the current upside momentum, if political uncertainty in Washington and lingering trade-war fears support the flight to safety.
Technically, gold broke above $1,330 chart resistance, and the metal’s fortunes may hinge on what happens around this level, the analyst added.
Previous resistance at $1,330 could transform into a dynamic support that encourages an incline higher towards $1,340. Alternatively, a failure for bulls to keep above $1,330 could invite a decline back towards $1,314.