Oil has hit a 15-month high on the back of optimism over the Opec deal which needs to be sorted out by November 30. But, with a record long position building across the combined benchmarks, a disappointment could leave some exposed. Full report to come within the hour....
Article / 21 September 2016 at 8:30 GMT

Gold rising on BoJ, Fed waits in the wings

Head of Commodity Strategy / Saxo Bank
  • BoJ statement boosts gold prices
  • Dovish FOMC may bring gold 'back to life'
  • Silver outperforms gold post-BoJ

Bank of Japan
The news out of the Bank of Japan overnight boosted gold, but it will likely 
take a dovish Fed to spark a real rally. Photo: iStock 

By Ole Hansen

Gold has bounced following today's Bank of Japan meeting as governor Haruhiko Kuroda signaled a prolonged period of monetary easing with negative interest rates. 

The initial weakness triggered by a stronger dollar was quickly reversed as the investment case for gold remains strong. A dovish Federal Open Market Committee announcement later today may be what investors need to bring an increasingly stale market back to life

Gold initially sold off on the stronger dollar before bouncing towards a pre-FOMC resistance zone between $1,325 and $1,330/oz...

Spot Gold

Create your own charts with SaxoTraderGO click here to learn more

Source: Saxo Bank

Yesterday I highlighted how gold has increasingly gone stale over the past three months following the Brexit vote. Investors have stepped to the sidelines while waiting for a deeper correction. A double whammy of central bank dovishness from the BoJ and potentially the FOMC may be enough to bring the market back to life and help mount a fresh challenge at the key resistance level of $1,380/oz. 

Should the FOMC decide, against the odds, to hike rates in order not to lose face following a host of hawkish comments in recent weeks, the market's reaction will depend on the dot plot trajectory of future rate hikes. 

A zone of resistance between $1,325 and $1,330/oz is likely to prevent gold from making further advances ahead of the FOMC meeting later today. Traders are looking for a break out of the range that has prevailed for three months now. Currently the boundaries are $1,305 and $1,345/oz and given the macroeconomic environment, we view a break in either direction as a buying opportunity.
Spot Gold
Source: Saxo Bank 

Once again, silver has outperformed gold following the bullish reaction to the BoJ announcement with the gold-silver ratio falling back below 68, a two-week low, and close to support at 67.75.

Gold-Silver ratio
Source: Saxo Bank

— Edited by Michael McKenna

Ole Hansen is head of commodity strategy at Saxo Bank


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail