Will Powell’s Comment Support Both Gold And Equity Bulls?

Will Powell’s Comment Support Both Gold And Equity Bulls?

Gold bulls look confident since Federal Reserve Chairman Jerome Powell said downside risks to the economy remain with trade wars, softening business investment and weak inflation, signaling that policy makers may be poised to cut interest rates as soon as this month. The S&P 500 saw a strong upward move up to 3003.68 and has come down a little after facing resistance.

Although the Fed chief’s semiannual testimony supports the market view that the central bank is preparing to reduce borrowing costs at its July 30-31 meeting (despite a strong June jobs report) but looks to favor gold bulls rather than supporting equity bears. Powell opened his testimony by embracing the central bank’s mandates for maximum employment and stable prices as well as its “independence,” noting that it comes with a need for transparency and accountability.

Gold Futures - Daily Chart

Gold Futures – Daily Chart

Gold Futures - 4 Hr. Chart

Gold Futures – 4 Hr. Chart

Gold Futures - 1 Hr. Chart

Gold Futures – 1 Hr. Chart

I find that steady Gold futures look to correctly express the concerns, expressed by Mr. Powell. No doubt that his remarks come amid mounting pressure from President Donald Trump to cut rates. I find that the S&P 500 looks ready to move downward from the current levels with steeper sliding moves; as the Fed chief has already given lawmakers a list of troubling economic issues that would be better solved by fiscal policy rather than by the central bank. Finding ways to boost productivity “should remain a high national priority,” he said. Despite a current trade war truce with China, Powell continued to stress downside risks to the outlook.

The Fed chief’s semiannual testimony supports the market view that the central bank is preparing to reduce borrowing costs at its July 30-31 meeting, despite a strong June jobs report. I find that S&P 500 looks ready to remain between the levels from 2955 to 3003 till July 30-31.

S&P 500 - Daily Chart

S&P 500 – Daily Chart

S&P 500 - 4 Hr. Chart

S&P 500 – 4 Hr. Chart

S&P 500 - 1 Hr. Chart

S&P 500 – 1 Hr. Chart

Finally, the Gold bulls look ready to move above the $1444 before the end of this month.

Let’s see who wins the final battle – Gold or Equity bulls!

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Will Powell’s Comment Support Both Gold And Equity Bulls?

Disclaimer: This analysis is purely based on the technical observations. I do not have any position in Natural Gas. One can create position in Natural Gas at his/her own risk.