• MTS Gold Morning News 20191031

    31 Oct 2019 | Gold News

· Gold futures on the COMEX division of the New York Mercantile Exchange closed higher on Wednesday, as the precious metal was boosted by weaker greenback.

The most active gold contract for December delivery was up 6 U.S. dollars, or 0.4 percent, to close at 1,496.7 dollars per ounce.

· The U.S. dollar index, which measures the buck against six rivals, went down 0.02 percent to 97.67 as of 1730 GMT.

Gold usually moves in opposite directions with the U.S. dollar, which means if the dollar goes strong, gold futures will fall as gold, priced in U.S. dollar, becomes expensive for investors using other currencies.

· However, gold futures headed lower in electronic trading after the Federal Reserve cut its benchmark interest rate and said it would monitor the economic outlook as it assesses its next decision on rates.

· Gold has been volatile on the day, settling higher in the futures ahead of the Federal Reserve interest rate decision, and then falling post the rate cut. Spot Gold had been trading as high as $1495.69 before it dropped to a low of $1,483.16, in an extension during Powell's presser.

· The Fed lowered the overnight lending rate to a target range of 1.5% to 1.75%. Notably, the FOMC removed the key clause from its post-meeting statement that the Fed is committed to “act as appropriate to sustain the expansion.” Removing this language signaled the central bank might be finished cutting rates.

· US dollar index climbed to a session high of 97.80, from 97.72 , immediately after the Fed cuts rates by 25 basis points which were a weight on the yellow metal. Investors and the consumer will cheer such a move, and with anticipation of further cuts down the line, investment into US-denominated assets could be seen to be supporting the US Dollar in the near term and thus be a wight on the Gold price which had benefited from geopolitical and economic tensions this year.

One of the major takeaways from initial releases of the decision and statement was the wording that had changed to The Federal Open Market Committee said it "would monitor the economic outlook as it "assesses the appropriate path of the target range for the federal funds rate.”

· “The demand for bullion will remain intact because the ‘phase 1’ trade deal doesn’t dismantle existing tariffs ... so given the deteriorating economic conditions and the swelling concerns over the global economic outlook, safe-haven assets like gold will remain supported going into 2020,” FXTM’S Tan said.

· Technically, “we would have a first bearish signal only below $1,480, while a rebound above $1,500 could open space for another recovery to $1,520,” ActivTrades chief analyst Carlo Alberto De Casa said in a note.

“As long as prices can remain above $1,460-$1,470, the main trend remains positive, despite the recent weakness.”

· Investors also kept a close watch on Brexit developments, where Britain is set to hold a December election after Prime Minister Boris Johnson won approval from parliament for an early ballot.

· As for other precious metals, silver for December delivery was up 3.6 cents, or 0.2 percent, to close at 17.867 dollars per ounce. Platinum for January delivery was up 5.5 dollars, or 0.59 percent, to settle at 930.6 dollars per ounce.

Reference: Xinhua, CNBC, FXStreet

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