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Gold hit the highest level in nearly two years since August 18, 2014 after the U.S. Federal Reserve sounded more dovish than expected at its latest policy meeting. Also, mounting worries that Britain could leave the European Union at the June 23rd referendum have made investors rushed to safe-haven assets like gold.
Spot gold added 1.4% to reach as high as $1309.70/oz, while US gold futures for August delivery were up $24.20 to $1312.50/oz, gaining 7% this month after dropping to the lowest level in more than 3 months on May 30th .
At the policy meeting, the Fed left interest rates unchanged, and stated that it is still planning to raise the interest rate twice this year. However, the central bank said that slower economic growth would curb the pace of the monetary policy in the future. According to HSBC, the longer the Fed delays a rate hike, the better the outlook for gold.
The Fed’s cautious view on another rate hike comes ahead of the referendum in Britain on its European Union membership. An exit by Britain from the EU, may push Europe back into recession, and exert further pressure on the global economy, as well as boost the appeal of safe-haven assets.
After the Fed’s statement and a press conference by the Fed Chair, the US dollar slipped against its rivals. In particular, the greenback was last trading at a two-week low versus the Euro at 1.11544. USDJPY was trading at 104.091, hovering near a 1-1/2 year bottom.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, gained 0.23 percent to 900.75 tons on Wednesday, a record high since October 2013.
Fig. GOLD D1 Technical Chart
Gold has reached $1308.60/oz with support from the green trend indicator underpinning the price from below. The commodity is in the overbought zone with the RSI lingering above level 70. ADX is at 41, with the DI+ (green line) heading up, and far away from the DI- (red line), suggesting a strong bull. The bullish market is anticipated to last for a while.
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