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Hawkish Fed Was A Surprise After Weak Retail CPI Data

Commentaries & Views

Gold is under pressure and testing the 200-day moving average that comes in today at 1250.8 (the 100-dma at 1250.4). Along with a key retracement level at 1248.9, this support will be crucial on the week. We have tried to be clear on our message, we are long-term Gold bulls but have been looking for lower prices in the near term. Following a dismal CPI and Retail Sales read early yesterday, the Fed stayed the course and raised interest rates a quarter point to 1.25. The surprise to many was the message that signaled they want to begin to unwind the $4.5 trillion balance sheet and are on course for another hike. Though this is what we were calling for, it surprised even us after such a poor read on the morning’s data. Today’s Jobless Claims and Philly and NY Fed Manufacturing data was a breath of fresh air for the hawks. Watch the key three star support on a closing basis, below there the next major level is a trend line that comes in at 1230.

Resistance – 1268.5**, 1284.6**, 1292.8*, 1297.4-1300.3***

Support – 1248.9-1250.8***, 1237*, 1227***

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