Gold trading outlook: futures advance a second straight day after the FOMC leaves target range intact

Written by Miroslav Marinov

Miroslav Marinov, a financial news editor at TradingPedia, is engaged with observing and reporting on the tendencies in the Foreign Exchange Market, as currently his focus is set on the major currencies of eight developed nations worldwide.

, | Updated: October 30, 2024

On Wednesday gold for delivery in April traded within the range of $1,227.30-$1,264.70. Futures closed at $1,259.90, soaring 2.15% on a daily basis. It has been the 18th gain in the past 33 trading days and also the sharpest one since February 11th, when the yellow metal added 4.45%. The daily high has been the highest level since March 11th, when a high of $1,280.70 per troy ounce was recorded. Gold has advanced 2.76% so far in March, following two consecutive months of gains.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in April were edging up 0.52% on Thursday to trade at $1,266.50 per troy ounce. The precious metal went up as high as $1,268.80 during the early phase of the European trading session, while the current daily low was at $1,255.30 per troy ounce, recorded during mid-Asian trade.

Demand for haven assets such as gold was bolstered yesterday, after at its second meeting this year the Federal Reserve Bank kept the target range for the federal funds rate on hold between 0.25% and 0.50%, in line with market expectations. Fed policy makers noted that economic activity in the United States has been increasing moderately, but, however, they presented revised down GDP growth and inflation forecasts regarding 2016. US GDP is now expected to expand at 2.2% in 2016, down from a 2.4% growth rate, as projected in December 2015. The economy is expected to grow by 2.1% in 2017, a revision down from a 2.2% growth in the prior forecast, while in 2018 the GDP is to expand by 2%, or unchanged compared to the December forecast.

PCE inflation is now projected to be at 1.2% in 2016, down from a rate of 1.6%, as forecast in December, while inflation estimates regarding 2017 and 2018 were kept intact at 1.9% and 2%, respectively.

According to extracts from the FOMC Policy Statement, released on March 16th: “…global economic and financial developments continue to pose risks. Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of declines in energy and import prices dissipate and the labor market strengthens further.”

“The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”

Today gold trading may be influenced by the weekly report on US initial jobless claims. The number of people in the United States, who filed for unemployment assistance for the first time during the business week ended on March 11th, probably rose to 268 000, according to market expectations, from 259 000 reported in the preceding week. The latter has been the lowest number of claims since the business week ended on October 16th 2015, when 259 000 claims were reported as well. In case the number of claims met expectations or increased further, this would have a moderate bearish effect on the US dollar and a moderate bullish effect on gold, respectively.

Additionally, the monthly Philadelphia Fed Manufacturing Survey may show that its key barometer remained in negative territory for a fourth consecutive month in March, coming in at a reading of -1.7. In February the gauge stood at -2.8. The Federal Reserve Bank of Philadelphia is expected to release the official results from the survey at 12:30 GMT.

Meanwhile, silver futures for delivery in May were gaining 0.61% on the day to trade at $15.685 per troy ounce, after going up as high as $15.705 a troy ounce during the early phase of the European trading session. It has been the highest price level since March 14th, when silver recorded a daily high of $15.800 per troy ounce.