Gold price RECUP September 16-20

Happy Friday, traders. Welcome to our weekly market wrap-up, where we take a look back at the last five days of trading, with a focus on market news, economic data and headlines that had the biggest impact on gold prices and other key correlated assets – and may continue in the future.

The Federal Reserve this week cut overnight interest rates for the first time in nearly five years, driving gold prices to $2,600 an ounce – and higher – for the first time in history.

So what kind of week has it been?

They finally did — (50 basis points!) — on Wednesday, as expected, the Federal Reserve’s Open Market Committee pushed markets into a new cycle by announcing the first overnight rate cut of 2020 .And amid a bit more chaos and volatility. than many expected to see in other major asset classes, the gold market showed it has some momentum left in the tank, even as traders and analysts had been expecting a discount for weeks. At the time of writing, spot gold looks set to close the week at new all-time highs.

While we’ve had a full five-session trading week, it makes sense to skip most of how gold traded in the days and hours leading up to the FOMC announcement this week; because prices were capped even through most of Thursday (although we’ll admit the “range” was higher than usual at $30/oz) and because the announcement of a “double” rate cut and the air of uncertainty on what’s next has put the gold market in a very different environment than it was trading in before 2pm ET on Wednesday.

Gold prices were likely kept in check immediately after the announcement and press conference by yields on interest-rate instruments such as the US 10-year note, having a more modest, less negative reaction to the news, so the yellow metal held somewhat surprisingly in neighborhood. of $2580/oz for the remainder of the post-Fed session. After a brief rally on Thursday’s handover from Wednesday’s US book to Asia, gold prices “collapsed” to $2560. But there’s a reason why “the first mover is always wrong” is a well-worn saying about commodity and currency trading; gold began its steep climb since the start of European trading around Thursday morning. Prices flattened for a while after meeting resistance just below $2,600, but trading on Friday, led by the London and New York/Chicago hubs, saw the precious metal lower to psychological levels in the final trading session of the week .

And there’s really a higher level of uncertainty about what’s next in terms of monetary policy moves and the pace of this easing cycle through the end of 2024. The gold market seems to be enjoying that, at least for now . If Jerome Powell & Co. would cut -0.25% or -0.50% on the first try was heavily debated until the last minute, and now that they announced at the last minute, we immediately go back to November 7th, where a second 50 Cut bps, a ‘standard’ 25 bps discount or no change at all are all straight on the table. None of these possibilities (or signals towards them in the coming weeks) should present a strong headwind for gold prices. But how well the metal’s chart can consolidate above $2600/oz at its first attempt remains to be seen.

The story continues

Upcoming labor market data – the September Jobs Report in two weeks, chief among them – will likely present the most volatile gold trading opportunities. For next week, however, the ticker may be mostly quiet, with precious little in the way of new macro data on which the Fed can base its next call. Instead, we have a robust schedule of post-meeting public appearances by key FOMC officials, including Powell himself, which could provide some clarity on the thresholds for the Fed consensus to move 25 or 50 next time.

In the meantime, traders, I hope you can enjoy your weekend for the next couple of days. After that, we’ll be back here next week for another market recap.