Last updated on October 20th, 2019 at 11:03 am
The prices of gold stayed flat on Wednesday, September 18, 2019, as investors and traders wait for clues on the monetary policy stance of the U.S. Federal Reserve. The demand for safe-have bullion was dampened by the improvement in the oil market situation.
Gold futures dropped slightly to $1,509.10 an ounce while spot prices barely moved at $1,501,39 an ounce.
The terrorist drone attack on Saudi Arabia’s major oil facilities reduced the kingdom’s crude oil output by half. But the Saudi government has already assured the market that it will be able to restore full production by the end of the month.
The bullion is considered as an alternative to high-risk investments during periods of financial and political uncertainty. Prices and demand are, therefore, affected by risk-on market sentiments.
The Federal Reserve is widely expected to make a second interest rate cut this year to avert the negative effects of the Sino-U.S. trade war. This is supported by the analysis of the CME FedWatch Tool which indicates a 65% chance for a quarter basis point rate reduction next week.
Gold traders and investors are also keeping an eye on the policy meeting of the Bank of Japan which is expected to implement monetary policy easing this year.
Anand Rathi Shares & Stock Brokers commodities analyst Jiger Trivedi considers $1,560 an ounce as a good resistance price level for the yellow metal. He doesn’t think gold will go above this level unless another benchmark interest rate cut is implemented by the Federal Reserve before the year ends.
UBS analysts believe that the correction of gold prices under the $1,500/oz level can still be considered healthy. And they expect more price consolidation and market indecision in the coming months.
On the technical front, Reuters’ technical analyst Wang Tao thinks that the neutral price range for spot gold is between $1,488 and $1,532.61 an ounce. A move away from this range will point to a new price direction.