Morning Gold: Gold Plunged After Feds’ Statments

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(Kitco news)- On Thursday in early U.S. trading, gold futures prices are severely lower and have careened to better-than-2.5-year lows. The market shows investors and traders in a strong “risk-off” approach after U.S. Federal Reserve event on Wednesday. Additionally, severe technical damage has been imposed to the gold market to recommend they drive in more downside price pressure to arise. The August contract traded down to a low of $1,285.00 in overnight trading. Spot gold was last quoted down $46.40 at $1,305.25. Comex August gold last traded down $70.10 at $1,303.90 an ounce.

Asian and European stock markets collapsed overnight. On Thursday morning, the U.S. stock indexes are as well firmly lower. Furthermost markets of raw commodity are getting hit roughly on Thursday. Significantly, markets at world bond are moreover experiencing severe selling pressure. After early Wednesday, the U.S. dollar index has rose, hitting a four-month low.

Whereas the FOMC statement announced Wednesday afternoon that the U.S. monetary policy won’t comprehend a coming up change and didn’t indicate anything about reducing of the Fed’s monthly bond-buying program, Ben Bernanke, Fed Chairman after the statement was released, at his press conference implied that the Fed in the upcoming months will reduce the acceleration on its monthly bond buying. After additional processing the Fed news, the market place currently estimates the Fed will certainly begin reducing its monthly bond purchases (tapering) by the end of this year. Several Fed observers are currently saying that by the time being next year the Fed’s monthly bond buying might be totally disappeared. For the previous small number of years, the commodity markets have been sustained by the weakening of the U.S. dollar. Now that the Fed seems ready to “take the punch bowl away from the party,” many markets are shocked.

On Thursday, additional news came from China around raw commodity-market-bearish as the HSBC flash PMI plunged to 48.3 in June from 49.2 in May. Any reading under 50.0 recommends reduction. The China manufacturing data for Thursday were the weakest in months, as said by reports.

Overnight reports came with other bad news for gold and stated that the Indian imports of gold will decrease by 30% because of the recent Indian government taxing measures intended to lower down the country’s trade inequality.

The civil disorder in Brazil and Turkey this week prepared investors and traders still watching. If the conditions their experience more violence in the streets, the gold market might motionless experience some safe-haven demand surface. However, on the day being the gold market certain to act as its other commodity complements, which are risk assets.

The U.S. dollar index increased Thursday morning and has made a large recovery from Wednesday morning’s four-month low. Wednesday’s Fed news is greenback bullish.

The U.S. economic data that are released on Thursday contains the U.S. flash manufacturing PMI, existing home sales, the Philadelphia Fed business outlook survey, the weekly jobless claims report and leading economic indicators.

The London previous P.M. fixing of $1,372.75 and A.M. gold fixing is $1,303.25.

Technically speaking, the gold market acquired an additional big bearish hit Thursday by falling to a two and a half-year low, and highly dipping under the chart support level at the April low of $1,323.00. Currently, the track is empty for more technical selling pressure in gold in the near term. The following big, longer-term downside price objectives are $1,227, and then at $1,100 and then at $1,027 for nearby Comex futures.

August gold futures prices are in an 8-month-old downtrend on the daily bar chart. The gold Bears’ next near-term downside breakout price objective is concluding prices beneath solid technical support at $1,250.00. The gold bulls’ next upside near-term price objective is to produce a close exceeding solid technical resistance at the May low of $1,338.00. The first resistance is sighted at the April low of $1,323.00 and then at $1,338.00, as for the first support is sighted at Thursday’s low of $1,285.00 and then at $1,275.00.