Gold has gained 1.7% after the FOMC held rates in the 2.25-2.5% range but signalled a cut was coming. It’s trading around $1,383 after rising to test resistance at $1,394 – prices haven’t been this high since March 2014.
Bulls may now be targeting the $1,400 handle, but there is plenty of room for a pullback before support comes into play at $1,362.
Fed Chair Jerome Powell stated in the post-meeting press conference that “Many participants now see the case for somewhat more accommodative policy has strengthened.”
Markets had been pricing in a rate cut in July. A weakening US dollar has helped push commodity prices higher in the wake of the meeting. Cable is up 0.6%, EUR/USD up 0.5%, and USD/JPY down 0.4%.
Oil prices have extended gains of up to 3% today after tensions in the Middle East cranked higher. Washington claims that a US military drone was shot down by an Iranian surface-to-air missile in international airspace. Iran’s Islamic Revolutionary Guard asserted this morning that the drone had entered Iranian airspace.
Tensions between Washington and Tehran have been building of late, after the US accused Iran of carrying out the recent attacks against oil tankers in the Gulf of Oman. Iran’s oil exports are the subject of sanctions by the US which came into force last year.
The news pushed Brent up to a ten-day high of $63.85, while crude oil rose to a 20-day high above $55.50.
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