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Gold trading strategy on December 19 after the FOMC news
Federal Reserve Chairman Jerome Powell stated that policymakers want to see further progress on inflation reduction before considering any future interest rate cuts.
Higher interest rates reduce the appeal of assets that do not yield returns. As a result, the U.S. Dollar Index surged more than 1%, reaching its highest level in two years, making gold more expensive for holders of other currencies. Meanwhile, the yield on the 10-year U.S.
Treasury bond hit its highest level in four weeks. Investors are now awaiting upcoming GDP and inflation data from the U.S., which are set to be released this week. These two key indicators could shape expectations for future monetary policy.
Although the Federal Reserve reduced interest rates by 25 basis points, gold still declined sharply due to a lowered outlook for future rate cuts next year, with only two cuts expected instead of the previously forecasted four. Currently, the CME FedWatch Tool indicates a mere 10% chance of the Fed cutting rates further in January.
In general, while the Fed did implement a rate cut in this meeting, it also signaled that the pace of rate cuts could slow, and future rate decisions will depend on upcoming economic data.
With the indication of a pause in rate cuts and fewer expected reductions next year, it is likely that gold will continue to face downward pressure. Currently, with a slight recovery in early Asian trading, it presents an opportunity to look for a good price to sell.
+ Scalping strategy
- Buy Scalp: 2606 - 2604
- Stop Lost: 2600
- Take Profit : 2610
- Sell Scalp : 2618 - 2620
- Stop Lost : 2624
- Take Profit : 2614
+ Trading Plan
- Sell Zone : 2633 - 2636
- Stop Lost : 2638
- Take Profit : ?????
- Buy Zone : 2593 - 2591
- Stop Lost : 2588
- Take Profit : ?????
- Buy Zone : 2585 - 2583
- Stop Lost : 2580
- Take Profit : ?????
Although the outlook for interest rate cuts has diminished, and the Fed may pause further rate reductions, gold could still face downward pressure. However, in the long term, the three rate cuts by the Fed have made gold cheaper, and the "opportunity cost" of holding gold has significantly decreased compared to the U.S. dollar and Treasury yields. As a result, gold remains relatively cheap compared to the dollar. Therefore, the overall trend for gold is likely to remain upward, with any declines being short-term and driven by temporary hawkish views within the Fed. Before increasing again, gold may drop another 50-70 price, or even 100 price.
Higher interest rates reduce the appeal of assets that do not yield returns. As a result, the U.S. Dollar Index surged more than 1%, reaching its highest level in two years, making gold more expensive for holders of other currencies. Meanwhile, the yield on the 10-year U.S.
Treasury bond hit its highest level in four weeks. Investors are now awaiting upcoming GDP and inflation data from the U.S., which are set to be released this week. These two key indicators could shape expectations for future monetary policy.
Although the Federal Reserve reduced interest rates by 25 basis points, gold still declined sharply due to a lowered outlook for future rate cuts next year, with only two cuts expected instead of the previously forecasted four. Currently, the CME FedWatch Tool indicates a mere 10% chance of the Fed cutting rates further in January.
In general, while the Fed did implement a rate cut in this meeting, it also signaled that the pace of rate cuts could slow, and future rate decisions will depend on upcoming economic data.
With the indication of a pause in rate cuts and fewer expected reductions next year, it is likely that gold will continue to face downward pressure. Currently, with a slight recovery in early Asian trading, it presents an opportunity to look for a good price to sell.
+ Scalping strategy
- Buy Scalp: 2606 - 2604
- Stop Lost: 2600
- Take Profit : 2610
- Sell Scalp : 2618 - 2620
- Stop Lost : 2624
- Take Profit : 2614
+ Trading Plan
- Sell Zone : 2633 - 2636
- Stop Lost : 2638
- Take Profit : ?????
- Buy Zone : 2593 - 2591
- Stop Lost : 2588
- Take Profit : ?????
- Buy Zone : 2585 - 2583
- Stop Lost : 2580
- Take Profit : ?????
Although the outlook for interest rate cuts has diminished, and the Fed may pause further rate reductions, gold could still face downward pressure. However, in the long term, the three rate cuts by the Fed have made gold cheaper, and the "opportunity cost" of holding gold has significantly decreased compared to the U.S. dollar and Treasury yields. As a result, gold remains relatively cheap compared to the dollar. Therefore, the overall trend for gold is likely to remain upward, with any declines being short-term and driven by temporary hawkish views within the Fed. Before increasing again, gold may drop another 50-70 price, or even 100 price.
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❗️ DISCLAIMER: The content shared in the training program is designed for educational and informational purposes only, so the program is not a financial advice or a solution.
❗️ DISCLAIMER: The content shared in the training program is designed for educational and informational purposes only, so the program is not a financial advice or a solution.
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