Gold Price Bull-Flag Formation Continues to Unfold Ahead of FOMC Minutes

New York (Feb 17)  Gold quickly approaches the 2019-high ($1326) as fresh data prints coming out of the U.S. economy dampen bets for a Federal Reserve rate-hike, and the Federal Open Market Committee (FOMC) Minutes may continue to shake up the near-term outlook for bullion as a bull-flag formation appears to be panning out.

Fundamental Forecast for Gold: Bullish

Gold breaks out of a narrow range as the 1.2% drop in U.S. Retail Sales along with the unexpected contraction in Industrial Production curbs the FOMC’s scope to implement higher interest rates, and it seems as though the central bank will continue to change its tune over the coming months amid the weakening outlook for growth and inflation.

Blue chip Economic Indicators

After accounting for the dismal data prints, the Atlanta Fed’s ‘GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2018 is 1.5 percent on February 14, down from 2.7 percent on February 6,’ and signs of a more meaningful slowdown may continue to drag on interest-rate expectations as a growing number of Fed officials endorse a wait-and-see approach for monetary policy.

At the same time, the Fed appears to be on track to taper the $50B/month in quantitative tightening (QT) as Governor Lael Brainard indicates that the ‘balance-sheet normalization process probably should come to an end later this year,’ and it seems as though there’s a growing consensus at the central bank to conclude the normalization cycle ahead of schedule amid the ‘cross-currents’ surrounding the economic outlook.

DailyFX