After the federal decision, what will happen to gold? By Investing.com

Investing.cpm – Commodity prices rise on Friday as traders hedge short positions as the weekend approaches. And there is new activity on the geopolitical front. But Treasury yields are still pushing the United States higher, putting pressure on commodity prices, including and on the price.

And word of mouth was reported Monday during the first meeting between the Biden administration and Chinese officials. Earlier this week, US President Joe Biden called his Russian counterpart Vladimir Putin a “murderer” and threatened to punish Russia for meddling in US elections in the past.

In a brief announcement today, the Federal Reserve has decided to halt the facilities it has provided to banks on capital requirements, and the move threatens to put pressure on investment banks to sell bonds of the Treasury, which increases the yield on 10-year Treasury bills, and leads to an increase in the dollar index and therefore to a fall in commodities.

Wall Street is negatively affected by this news, pushing bank stocks today to lower levels as pessimism about the future spreads due to the Fed’s suspension of previous support.

Bank of America (NYSE 🙂 revised its return expectations higher earlier today and sees the 10-year bond yield above 2.25%, which could herald a stock market sell-off.

Despite the instability of the bulls’ legs, they are still at the forefront of the market, according to a Bank of America survey that showed the flow continues despite the high return.

As for gold, you should watch what happens to US intermediate crude after Thursday’s sharp drop. If the decline continues, that would be an indicator of risk for the entire commodities market, and the market is mostly rallying now, and it could peak.

Technically, gold bears still dominate the technical short term. However, the price avoided the 9 week downtrend line. The bulls’ next target will be the April close at $ 1,775 an ounce. Support levels are now at $ 1,673 an ounce and resistances at $ 1,744 an ounce and $ 1,752 an ounce.

On the recent Federal Reserve decision:

Investors will be watching demand for government securities closely in the coming period, after the Federal Reserve refused to extend waivers that allowed banks to raise capital against T-bills and bonds. central bank deposits.

The Federal Reserve has said it will review the SLR while the waiver expires on March 31.

Analysts and investors are concerned that banks will refrain from buying bonds and either sell or cut lending in overnight, bond-backed funding markets amid unprecedented growth in reserves, which threatens banks to exceed capital rate limits.

If this happens, the pressure will increase in the market with a sharp rise in Treasury bill yields amid a sell-off that is occurring due to expectations of strong economic growth and high inflation.

“Banks might not be able to stop markets when they fall sharply in times of high volatility. The risk here is great, as periods of volatility will become more volatile,” said Gennady Goldberg of TD Securities.

Pending the announcements, markets sensed the Fed would make such a move, with yields on US Treasuries surging 5 basis points to 1.750%, from a year high of 1.754% on Thursday.

Today’s reaction was not strong as the market had already calculated yesterday’s decision, according to Ian Lingen of BMO Capital Markets.

The program has provided strong psychological support to the markets, as banks have not exploited it aggressively so far.

“It was sort of a rescue,” says Patrick Larry of N Capital. “It was kind of a rescue. If the market had liquidity problems, banks could step in to buy and add more liquidity, but now with capital constraints, banks may have a hard time doing this. “