Listen to the latest market mood for XAUUSD.

The Fed met last night and they left rates unchanged as expected. The Fed had a dovish stance as the statement recognised that ‘activity and employment had moderated in recent months’, with weakness in ‘the sectors most adversely affected by the pandemic’.

Jerome Powell managed to strike a balance between sounding concerned about the US economy but also optimistic about a vaccine. The reaction in the US10 y was telling as it drifted back down towards the 1.00% yield area. This dovish outlook is supportive for gold as the low rates, high amounts of QE, positive environment for gold is set to continue for now.

Therefore, expect gold buyers on any breakouts higher of the trend line above.

Trade Risks:

  • Any good vaccine news will weigh on gold.
  • Any strong signs of US recovery will invalidate this outlook.
  • Any talk of bond tapering will invalidate this outlook.
  • Any strong moves higher in US 10 year yields will strengthen the dollar.
  • Any risk off moves will strengthen the USD.