Gold climbs higher to $1,550 area as Fed brings out big guns

Gold climbs higher to $1,550 area as Fed brings out big guns

  • Fed launches open-ended QE to support economic activity.
  • US Dollar Index pulls away from multi-year highs, holds above 102.
  • Wall Street's main indexes extend slide on Monday.

The troy ounce of the precious metal erased more than $50 last week but erased all of its gains in a single day as investors seem to be reassessing their choice of safe-haven following the Fed's drastic policy action. As of writing, the XAU/USD pair was up 3.4% on a daily basis at $1,550.

USD loses strength on Fed's aggressive move

The Fed on Monday said it has launched an extensive range of new programs to confront disruptions to the economic activity in the face of the coronavirus outbreak. Further details of the announcement revealed that it will start buying treasuries and mortgage-backed securities in the "amounts needed," which is essentially seen as an unlimited quantitative easing program. 

The initial market reaction caused the greenback to come under strong selling pressure and provided a boost to the pair. 

Although it's too early to say, gold might be re-establishing its status as a safe-haven amid easing worries over USD shortage in funding markets.

On the other hand, Wall Street's main indexes failed to capitalize on this development and suffered heavy losses at the opening on Monday to show that investors are still not convinced that the global economic slowdown will be temporary. Reflecting the intense flight-to-safety, the 10-year US Treasury bond yield is erasing 12% on Monday. 

Technical levels to watch for

XAU/USD

Overview
Today last price 1548.62
Today Daily Change 49.56
Today Daily Change % 3.31
Today daily open 1499.06
 
Trends
Daily SMA20 1596.02
Daily SMA50 1582.85
Daily SMA100 1535.3
Daily SMA200 1503.19
 
Levels
Previous Daily High 1516.19
Previous Daily Low 1455.54
Previous Weekly High 1561
Previous Weekly Low 1451.3
Previous Monthly High 1689.4
Previous Monthly Low 1547.56
Daily Fibonacci 38.2% 1493.02
Daily Fibonacci 61.8% 1478.71
Daily Pivot Point S1 1464.34
Daily Pivot Point S2 1429.61
Daily Pivot Point S3 1403.69
Daily Pivot Point R1 1524.99
Daily Pivot Point R2 1550.91
Daily Pivot Point R3 1585.64

 

 



Source: FxStreet

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