Hawaii Six O - Gary Wagner
Gold futures hold and find support at $1980 as traders wait for FOMC news
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Debt ceiling bills, GDP, and upcoming inflation reports have dominated the news cycle but have had little to no solid impact on the price of gold futures. Gold futures basis the most active June contract remains range bound with a solid level of technical support found just above $1980 and solid technical resistance just below $2029. For the last two weeks or nine trading days, gold has been in essence trading sideways in a defined range of $50 per ounce.
That being said, recently there has been a negative bias after gold futures traded to its highest value of the year at $2066, and the highest closing price of $2056 on April 14. In the short time of nine trading days, gold tested its lows at $1980 and recovered on each occasion. On five of the last nine trading days gold has closed below its opening price and on four of the last nine trading days has closed above its opening price.
Recent reports have had little impact on moving gold futures above or below this $50 price range. Today the BEA released its advance first estimate of first quarter GDP revealing that GDP grew at only 1.1% annually for the first three months of 2023. The report reveals that businesses for the most part have been actively investing their revenue, and GDP growth was based on robust consumer spending. Today’s GDP report came in well under estimates by Wall Street analysts that were predicting GDP growth for the first three months of this year to come in at 2%.
Tomorrow’s PCE report is expected to show that the core PCE continues to be elevated at approximately 4.5% and inflation continues to grow last month by 0.3%.
As of 5:10 PM EST gold futures are currently trading up one dollar or 0.05% and fixed just below $2000 at $1997. The dollar is in essence unchanged currently up 0.02% and fixed at 101.23.
Clearly, market participants are waiting for next month’s FOMC meeting to conclude. There is still an overwhelming consensus that the Federal Reserve will initiate its 10th consecutive rate hike. According to the CME’s FedWatch tool, there is an 87.4% probability that the Fed will announce a ¼% rate hike next Wednesday taking their terminal interest rate to between 5% and 5 ¼%. There remains a small faction (12.6%) of traders that believe that the Federal Reserve could take the first pause in rate hikes at every FOMC meeting since March 2022.
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Wishing you as always good trading,
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