Opinion with Peter Hug
Gold Bounces But Bottom May Not Be In
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
(Kitco News) - Gold bounced nicely off strong support at the $1,302 level yesterday, with follow-through buying as the Chinese returned from holiday. It’s too early to call a bottom, as the dollar remains bid. The key level we are watching is the 1.20 euro/dollar area. This support line has held for months and an overlay of gold prices to the euro/dollar chart are in sync. Today we have the Federal Reserve announcement on interest rates and it is widely expected that the Fed will leave rates unchanged at this meeting. The important focus will be on the Fed’s language about inflation concerns. A heightened worry on this front will reinforce the narrative of a more aggressive Fed and a continuing higher trajectory for the dollar. We don’t see gold breaking down before the announcement. Technically, the $1,307 and then again the $1,302 area provide support. A break above $1,312 suggests a move with potential to the $1,322 level.