spot gold continued within a narrow range above the 1700 mark, the previous day Federal Reserve Chairman Powell refused to negative interest rates as a tool to stimulate ideas, but hinted will be introduced With more stimulus measures, gold prices continued to rebound above 1710.
Powell said that weak economic growth and stagnation of income will continue for a "long period of time," promising the Fed will use more tools as needed, and called for increased fiscal spending.
Gold futures climbed on Wednesday and closed above $ 1,700 per ounce for the second day in a row, as traders weighed economic growth prospects with the prospect of negative U.S. interest rates to judge gold ’s next big move.
Federal Reserve Chairman Jerome Powell said in a webcast speech held at the Peterson Institute for International Economics on Wednesday that the US economic outlook is "highly uncertain and facing significant downside risks."
However, he also stated that the Fed will not use negative interest rates as part of its monetary policy tool. "The committee's view of negative interest rates has not really changed. This is not what we are considering."
US President Trump tweeted on Tuesday that he supports lowering US interest rates to a negative value.
Trump further stated late on Wednesday that I like negative interest rates and I strongly feel that we should implement negative interest rates. On the issue of negative interest rates, I disagree with Fed Chairman Powell, Trump said.
Jim Wyckoff, a senior analyst at Kitco.com, explained in a daily briefing: “This is of particular interest to precious metals traders because the warning for investing in gold has always been that it does not provide dividends to investors. Zero interest rates or more Low interest rates will help eliminate the 'opportunity cost' associated with owning precious metals. "
Comex June gold futures prices rose 0.33% on Wednesday to close at $ 1,716.40 per ounce, an increase of $ 9.60, or 0.6%.
Data released on Wednesday showed that the wholesale cost of goods and services in the United States fell by 1.3% in April, the largest decline ever recorded, and that gold prices also received a boost.
Swissquote analyst Ipek Ozkardeskaya wrote in a report: "Gold prices are still hovering around $ 1,700 per ounce. Increased safe-haven buying and U.S. Treasury yields fell below the $ 1,700 mark, but at current levels, investors He expressed doubts about gold's ability to hedge, and feared that panic selling of risky assets would occur again. "
"However, if the market encounters a strong headwind, we believe that the price of gold will jump to the level of $ 1800 per ounce without hesitation," the analyst said.
At the same time, ameel Ahmad, global head of foreign exchange strategy and market research at FXTM, told MarketWatch that “(gold) must make some sacrifices in order to charge in either direction.” And, “people can only hope that if the price of gold is true Challenged the "highs over seven years", it was not because of the relaxation of restrictions that led to a new wave of epidemic infections.
In Wednesday's trading, the world's largest gold ETF, SPDR Gold Trust, rose 0.7%.
Zaner Metals wrote in a daily briefing: “Investment demand continues to push up the price of gold, and gold ETF holdings have increased for the 13th consecutive day, bringing this year ’s net purchases to 14.5 million ounces. Unfortunately, logically, bulls It is believed that the threat of physical demand overwhelms the slow and steady growth of investment demand. "
Analyst Christopher Lewis wrote that the gold market rose slightly during trading hours on Wednesday, testing the top of the overall triangular pattern.
Lewis said that the gold market rebounded slightly on Wednesday's trading session, breaking through the downward trend line that extended downward to form a symmetrical triangle. If we can break through the highs of Wednesday's trading session, then the market is likely to rise towards the $ 1750 level, or even above the $ 1800 level.
Lewis pointed out that under all the same conditions, this market is likely to use $ 1700 as an important support level. Below, the 50-day moving average also provides support, so we think that the possibility of gold prices rising is much greater than the possibility of falling.
However, it is worth noting that Lewis said that as politicians continue to increase fear in people's hearts, the possibility of further spread of coronavirus will cause major problems. There may be a lot of volatility and panic trading in the market.
He said that in the end, according to the long-term trend, the gold market seems to want to go higher. We did see such an attempt in the trading on Wednesday. In fact, the gold price broke a potential inverted hammer shape on Tuesday is also a good sign.
Lewis said that I agree with the idea of buying valuable assets, so a fall in the price of gold may be seen as an opportunity. Under all the same conditions, this is a volatile market, but for a long period of time, the price of gold has been moving from the lower left to the upper right.