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Gold prices getting comfortable above 61.8% Fibo, eyeing territory on $1,300/oz towards $1,350/oz

  • The outcome for the FOMC December meeting minutes was rather muted but have confirmed the market's sentiment that the Fed is taking a more patient approach to rate hikes.
  • Gold prices have crept higher on the day, basing down at $1,279/oz and reaching a fresh high on the session post the minutes at $1,292/oz at the time of writing, through R1.

Gold had already been boosted on the dollar's weakness following  Bostic and Evans speaking earlier.  We already got a dovish tip of the hat from Bostic yesterday when he said that he currently’ sees only 1 rate hike for 2019.

Fed officials tipping their dovish hats

Today, the Atlanta Fed President followed up saying that he was open to a rate cut if downside risks were all "come to bear," and added that the policy could move in either direction, adding that the Fed needed to strongly signal that it's not locked into a trajectory and US Dollar Index slumped to its lowest level since October 22 at 95.54 and has just extended that decline to 95.15 following the FOMC minutes. 

"As 2019 unfolds, monetary policy convergence — where the Fed ends its tightening cycle while other central banks start removing monetary accommodation — should help to weaken the USD relative to its G10 peers and lift EM currencies, which we project will lift gold to average $1,350/oz in the last three months of the year and trend higher thereafter,"

Analysts at TD Securities wrote.

Gold levels

Gold is making higher highs above the 61.8% Fibo retracement of the 2018 decline to date but there is a lack of conviction at the 1300 level still. Failures at this juncture will likely turn attention back to the 1280 level and below. A break there opens a runway down to the 2018 50% Fibo area at 1262. RSI and MACD are neutral. 

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