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Important Notice - Fraud awareness
Important Notice - Scam alert
54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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Gold reclaims $1900 as interest rates hike lower than expected

The precious metal gold had reclaimed its celebrated position above $1900 on Thursday during the Asian session after the Fed's speech yesterday failed to satisfy the investors' curiosity, who hoped for a higher interest rate hike by at least 75 basis points.

Gold prices has been pushed down to hades; to as low as $1956 all through the last week of April and the first week of May; due to the heightened fear over a hawkish interest rate hike by the Fed, has once more reclaimed its prominent position above 1900 with over 450pips gains this week alone. This is because many considered the recent hike as a more dovish attitude.

During the Fed's speech yesterday, Fed Chairman - Jerome Powell disclosed that the interest rate hike to be implemented is finally slated at 50 basis points. This was below the general market expectations, which hoped for at least a 75 basis points increment.

Fed Chair Powell made it clear that the Fed is not "actively considering" a 75 basis point interest rate hike as some investors have hoped. He further explained that this decision is because the Fed wants to meet up with the market expectations. Hence, they chose to go slower than what the investors were counting on, a 75 basis point increase in the interest rate hike. 

This lowered interest rate hike seems to have weakened the US dollar that has performed at its peak for over four weeks now. The dollar index fell to 102.5 from its peak at 105 during the Asian session.

Investors are returning their investments into risky assets, given yesterday's unsatisfactory interest rate hike. Gold has always been the investors' choice in such situations. The bulls have finally dominated the market, wiping away the bears in just an instant. Gold's weekly close tomorrow will be very decisive in ascertaining the general trend for the rest of the month.

At present, the next resistance for gold is $1956. Any sustained break below 1900 might take us back to the support of 1984. We hope for more gains in gold to end the week.

Last Updated: 05/05/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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