Gold rises to six-year high boosted by the dovish Federal Reserve
Global crude prices rose sharply today after tensions between the United States and Iran escalated. The latest round of tensions rose after Iran shot down a US spy drone that was flying above the Strait of Hormuz. In a report by New York Times, Donald Trump authorized retaliatory attacks on the country and later backed-off. At the time, planes were in the air while ships were already positioned for the strikes. The price also rose after blasts happened in a Philadelphia refinery owned by the Philadelphia Energy Solutions, a company that is owned by Sunoco and Carlyle Group.
The euro rose today after positive PMI data from the European Union. In the EU, the composite manufacturing PMI rose to 52.8, which was higher than the expected 51.8. The services PMI rose to 53.4, which was higher than the expected 53.0. The manufacturing PMI rose to 47.8 from the previous 47.7. This was slightly lower than the expected 48.0. In Germany, the manufacturing, services, and composite PMI rose to 45.4, 55.6, and 52.6 respectively. These were higher than investors were expecting. In France, the three rose to 52, 53.1, and 52.9 respectively.
The Japanese yen declined today against the USD after the country released weak CPI data. In May, the headline national CPI rose by an annualized rate of 0.7%, which was lower than April’s CPI of 0.9%. The core CPI, which removes the volatile food and energy products rose by 0.8%, which was lower than the previous 0.9%. In addition, the country’s flash manufacturing PMI data from Nikkei and Markit showed that the activity declined to 49.5 from the previous 49.8. This was lower than the expected 50. This data came a day after the BOJ left interest rates unchanged and promised to do more to stimulate the economy.
The EUR/USD moved up slightly against the USD after positive PMI data from the EU. The pair is now trading at 1.1305, which is a few pips above where it started the day. On the hourly chart below, the pair is trading above the 14-day moving averages. It is also in between the upper and lower line of the Envelopes indicator. The RSI has remained slightly below the overbought level of 70. There is a likelihood that the pair will try to break out the important resistance level of 1.1317.
The price of WTI crude rose sharply to a high of $57.90. This was the highest level for the pair since May 31. On the four-hour chart, the price is above the 14-day and 28-day moving averages. It is also between the 50% and 38.2% Fibonacci Retracement levels. The RSI remains above the overbought level of 70. The same is true with the relative vigor index (RVI). Therefore, there is a likelihood that the pair will continue moving up to test the important support of 60.
Gold rallied to a six-year high following the dovish decision by the Federal Reserve. The XAU/USD pair reached a high of 1411. On the daily chart, this price is above all the short and medium-term moving averages while the RSI has rallied to above the overbought level of 84. The price is also along the upper line of the Bollinger Bands. There is a likelihood that the pair will continue rallying, to test the important resistance level of 1450.