- Gold Pullback May Prove Short-lived, Copper Looks To China Data
- What To Make of Gold’s Bullish Move
Gold price are sharply higher on the week with the precious metal up
nearly 3% to trade at $1315 ahead of the New York close on Friday.
Thursday saw bullion post its largest daily range in nine months as
prices surged through key technical levels before teetering out just
above the May high. The move comes amid escalating geopolitical
tensions in the Middle East and a more dovish tone from the FOMC this
week as equities continued to march higher. But does this really change
things for the broader gold outlook? The answer is simply- Yes.
As expected the central bank tapered QE purchases by another
$10billion this week bringing the monthly pace of asset purchases down
to $35billion. The accompanying quarterly projections however showed a
slight shift in the committee’s outlook on interest rates with both the
timing and the longer-run rate expectations suggesting a greater
leniency towards a more accommodative stance on monetary policy. During
her presser, central bank chair also talked down the threat of
inflation suggesting that the data remains “noisy” and that underlying
metrics remain in line with the Fed’s broader expectations.
Looking ahead into next week investors will be closely eyeing the
final read on 1Q GDP with consensus estimates calling for another
downward revision from an annualized -1.0% q/q to -1.8% q/q. Durable
goods orders and housing data are also on the docket with existing home
sales, new home sales and the Case Shiller home price index on tap.
The USD remains in a vulnerable state heading into the releases and
should the data disappoint, look for gold to remain well supported with
a pullback early next likely to offer more favorable long-entries.