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Commerzbank: Any Post-Fed Sell-Off Would Be Buying Opportunity

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Commerzbank analysts said they would view any gold sell-off after this week’s meeting of the U.S. Federal Open Market Committee as a buying opportunity. “Gold is trading virtually unchanged at around $1,420 per troy ounce as the new week begins, leaving it well above the psychologically important $1,400 mark,” analysts said. “This is set to be an eventful week for gold market participants, the highlight of which is likely to be the Fed’s decision on interest rates mid-week.” Policymakers are widely expected to cut U.s. interest rates. “A rate cut of ‘only’ 25 basis points could prove disappointing given that the market has priced in more,” Commerzbank said. “Much will also depend on what Fed Chair [Jerome] Powell says in the subsequent press conference. If he makes no mention of a cycle of rate cuts, causing gold to come under pressure, we would not see this as a trend reversal but as an attractive buying opportunity. After all, the monetary policy of many central banks is expansionary, and is currently becoming even more expansionary, which should benefit gold as a store of value.”

By Allen Sykora of Kitco News; asykora@kitco.com

 

Bannockburn: FOMC, Jobs Report To Be Highlights Of The Week

Monday July 29, 2019 10:55

The outcome of a Federal Open Market Committee meeting on Wednesday and Friday’s report on July nonfarm payrolls will be highlights for financial markets this week, said Marc Chandler, chief market strategist with Bannockburn Global Forex. “There is little doubt that the Federal Reserve will ease monetary policy at the conclusion of the FOMC meeting on July 31,” Chandler said. “We never thought the chances of a 50-bp [50-basisl-point] move were anything but negligible, though even at this late stage, the market appears to be pricing in about a one-in-five chance.” Chandler said “we are sympathetic” to Fed officials that do not see the urgency to ease monetary policy, pointing out that second-quarter economic growth, with more than a 4% surge in consumption, is above-trend growth. “Investors will likely learn at the end of next week that job growth slowed in July,” Chandler said. Expectations are for a rise of around 169,000 nonfarm jobs, he said, after an average of 172,000 average in the first six months and 223,000 average in 2018. “Nevertheless, it remains sufficient to absorb the new entrants and keep the unemployment rate near the lowest in a generation and underpin average hourly earnings at the upper end of a multi-year range,” Chandler said. 

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