- SWFX traders are 53% bullish
- 68% of pending commands are to buy the metal
- The bullion opened at 1,219.00
- Upcoming Events: US Building Permits; US Philly Fed Manufacturing Index; US Unemployment Claims; US Housing Starts
As analysts expected, the US Federal Reserve raised interest rates at its March monetary policy meeting on Wednesday amid rising inflation, solid economic growth and the strong labour market. The Central bank lifted its overnight interest rate by 25 basis points to a range of 0.75% to 1.00%. This was the necessary step to get the Bank's monetary policy back to a normal footing. The Fed Chair Janet Yellen said in a statement that the economy performed strong over the last couple of months, in line with policymakers' forecasts.
The Fed also confirmed its intention to raise rates at least two more times this year, if the economy remains on the track. Fed officials noted that inflation was close to the Bank's target of 2% and corporate investment rebounded after a few months of weakness. Analysts suggest that interest rates are unlikely to return to a neutral level until the end of 2019. Moreover, some analysts see a faster pace of increases in 2017. Earlier on the day, the Bureau of Labour Statistics reported consumer prices rose 0.1% last month, following January's gains of 0.6% and surpassing analysts' expectations for a 0.0% reading. Meanwhile, core inflation advanced 0.2%, slightly down from a 0.3% climb seen in January but in line with forecasts. Other data released showed retail sales and core retail sales rose 0.1% and 0.2%, respectively
Upcoming events: US data package
On Thursday, at 12:30 GMT, a US macroeconomic data package will be released. However, none of the data is likely to cause a large enough impact to be noticeable. The package will consist of the US Building Permits, Philly Fed Manufacturing Index, US Unemployment Claims and the US Housing Starts. These data releases will not be covered by the Dukascopy research team this week.
Gold approaches 1,230 level on Thursday
Daily chart: On Thursday morning the yellow metal's price continued to score gains in the aftermath of the jump, which occurred on the Federal Funds rate increase on Wednesday. Although, the commodity price has run into the resistance of the weekly R1, which is located at the 1,228.89 level. It is highly possible that a consolidation of positions will occur, as traders take profits. However, the decline of the price is unlikely to fall lower than the 1,220 mark, near which the 20-day SMA and the 38.20% Fibonacci retracement level are located at.Daily chart
Hourly chart: The hourly chart shows that the jump occurred up to the 1,220 level near the 38.20% Fibonacci retracement level. The retracement level hindered the surge for four hours before it resumed. Most recently the metal has bounced off the resistance put up by the weekly R1 at the 1,228.89 level.
Hourly chart
Markets remain bullish
OANDA Gold traders have increased their bullish outlook, as open positions are 71.63% long on Thursday, compared to 69.96% previously. Meanwhile, traders of SAXO bank have decreased their bullish outlook, as 63.25% of open positions are long, compared to 68.57% on Wednesday.