Gold approaches $1300 after FOMC decision

A weak US dollar boosted the price of the gold toward the $1300 handle after the Federal Reserve decision. The precious metal climbed from $1283 to $1296, hitting the highest level in a month. It was trading at $1292, holding a modest bullish tone and rising for the sixth day in a row.

The decision of the US central bank to leave rates unchanged and the dovish tone of the statement pushed gold to the upside. Stocks rose modestly and US bond yields declined.

The price of gold has been rising constantly since the release of the May’s employment report that showed worst-than-expected numbers and reduced Fed rate hike expectations significantly. Now with the June meeting behind, it will be important to see how gold performs, particularity with the price near $1300.

Technical indicators show overbought readings and price is close to a strong resistance area. A correction seems possible from current levels but a daily close on top of $1295 or a break significantly on top of $1300 could open the doors for a continuation of the rally.