Be Watchful As Fed Chair Powell’s Testimony Might bring Surprises, $20 Volatility Expected in Gold; Dec 01, 2020

U.S. Fed Chair Powell’s Testimony + U.S. ISM Manufacturing PMI

Today’s U.S. session will be more eventful as today is the first day of Fed Chair Powell’s Testimony. Along with it, on the same time U.S will publish ISM Manufacturing PMI data too. The releasing time of both the data is at 1500 GMT/2030 IST.

ISM manufacturing PMI is a leading indicator of economic health – businesses react quickly to market conditions and their purchasing managers hold perhaps the most current and relevant insight into the company’s view of the economy. This data is derived via a survey of about 300 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries and inventories.

Let’s see how Gold has reacted during the previous data release:

Nov 02:

Oct 01:

Fed Chair Powell’s Testimony Day 01

The Testimony usually comes in 2 parts: first he reads a prepared statement then the committee will hold a question and answer session. Since the questions are not known beforehand they can make for some unscripted moments that lead to heavy market volatility. As head of the Central Bank, which controls short term Interest Rates, he has more influence over the Nation’s currency value than any other person. Traders scrutinize his public engagements as they are often used to drop subtle clues regarding future Monetary Policy.

Important Announcement Likely on:

  • CARES ACT – Funding to help Economy through the Pandemic situation
  • Outlook of the Economy – Highly Unpredictable what additional measures come out from Federal Reserve?
  • Lending and Liquidity Programs – Any Changes or Upgrade Version might be introduced
  • Further Bond buying?
  • Covid – 19 Vaccine updates; Timing, production, distribution, efficacy and costing

Let’s see how Gold has reacted during the previous data release:

Sept 22 – 24:

June 16- 17:

Technical View:

XAU/USD (Gold): Gold spikes up ahead of U.S. ISM manufacturing PMI as well as Fed Chair Powell’s testimony reports. Today pair made intraday high at $1,811 and low at $1,775 mark. A sustained close above $1,810 requires for the upside rally. On the other side, consistent close below $1,776 will check key supports as well. Key support levels are seen around $1,775, $1,764, $1,758, $1,747, $1,740 and $1,720 mark respectively. Key resistances are seen at $1,812, $1,817, $1,822, $1,832, $1,840, $1,857, $1,876 and $1,882 marks respectively.

Take a look and do trade wisely!
Good Luck