FED remains on hold yet keeps balanced outlook

Yesterday, the FOMC decided unanimously to keep unchanged its current federal funds rate at +1.5% to +1.75% percent. The most positive comment made in the FOMC statement was regarding the labor market remaining rather strong with the unemployment rate remaining at all time low levels. Some points in the statement that indicated questionable results were regarding investment and exports that remained weak. The weakness may have been due to uncertainty in the previous months on the US Sino trade matter. However, those risks at the moment are diminishing. Also, the FOMC seems determined to bring the inflation rate back to its target 2% as any level below that may not be considered appropriate by the FED. According to the FED some signs of global economic rebound have appeared. In addition, Chairman Jerome Powell stated that the coronavirus is a very serious issue and could to have some negative impact on China’s economy while the negative effects could also spread around the world as the matter creates a lot of uncertainty. The USD moved lower sending Gold’s price higher during Fed’s Chair J. Powell speech while the effect continued today in the European morning. XAU/USD has been moving in a sideways motion between the (R1) 1585.40 level and the (S1) 1567.70 level since the start of the current week. Even though the (S1) was tested and breached to the downside yesterday, as the FED meeting got closer Gold’s price seemed to have bullish tendencies possibly displaying investors anticipation of the event. If the precious metal continues to climb, then it could reach our (R1) 1585.40 level that was tested on the 27th of January. The next possible stops higher could be initially the (R2) 1593.00 line and even higher the (R3) 1610.60 level keeping in mind that the 1600 psychological threshold also exists. Please note the US GDP advanced rate to be released today in the European afternoon could impact Gold’s price and so caution is advised.

Brexit’s final steps and UK’s 5G plans.

During the morning European session, we get from the Switzerland the KOF Indicator for January as well as Germany’s Employment data for January. Some hours later we also get the Eurozone’s Business Climate, Economic Sentiment, and Consumer sentiment all for January. During the European mid-day BOE’s Interest decision will take place while in the European afternoon, we also get the German HICP rates. In addition, in the American session, we get the US GDP Advance rate for Q4 and the Initial Jobless Claims.

Other economic highlights today and early tomorrow

During the European session, we get from the UK the nationwide HPI rate for January as well as Germany’s GfK consumer sentiment for January. In the American session, we get the US the trade balance figure, the pending home sales rate both for December and while later on we get the EIA crude oil inventories figure.

XAU/USD 1 Hour chart