Will the Fed Minutes finally push Gold back above 1,600 USD?

By Admiral Markets

Source: Economic Events February 19, 2020 – Admiral Markets’ Forex Calendar

Wednesday, today, stands to be a very interesting day for Gold traders. Since several Fed members are planned to give speeches, and the FOMC minutes from the Fed’s January 30th rate decision is to be published.

In general, the outlook in Gold turned very positive over the first two weeks of February, since the precious metal’s reaction to the solid US economic data, as well as the solid reaction to Fed chairman Powell’s neutral (and, in our opinion, Gold-bearish) comments at the semi-annual testimony in front of the Congress last week.

His comments stated that the current rate policy stance is appropriate, but market participants still expect the Fed to cut rates at least once, by 25 basis points, in 2020 (according to the Fed Watch Tool). Any dovish hints, especially from the FOMC minutes this evening, are a potential bullish driver, bringing the region around 1,600 USD into our focus again.

The main driver for such a move could certainly put pressure on 10-year US Treasury yields and an attack or even possibly a break below the technically important level of 1.50%.

If we get to see a break lower here, a dynamic move lower in US yields should follow, favouring gains in Gold then.

Technically, Gold stays clearly bullish as long as the precious metal trades above its daily trend-support around 1,440/450 USD, keeping the potential next target on the upside around 1,650/700 USD active.

If we get to see a short-term drop below 1,550 USD, the picture would only darken short-term and favour Intraday-Short engagements, activating the region around 1,510/515 USD:

Source: Admiral Markets MT5 with MT5-SE Add-on Gold Daily chart (between November 16, 2018, to February 18, 2020). Accessed: February 18, 2020, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2015, the value of Gold fell by 10.4%, in 2016, it increased by 8.1%, in 2017, it increased by 13.1%, in 2018, it fell by 1.6%, in 2019, it increased by 18.9%, meaning that after five years, it was up by 28%.

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