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15 Jan 2015
Gold declines 12% in CHF terms after the SNB abandons cap
FXStreet (Mumbai) - Gold prices took a hit in CHF terms after the Swiss National Bank (SNB) surprised the markets by abandoning the minimum exchange rate, while lowering interest rate to -0.75%.
Gold in CHF terms or XAU/XHF currently trades 12.06% lower at CHF 1100.68/Oz levels, compared to the previous close at USD 1251.66/Oz levels. The SNB abandoned the 4-year long EUR/CHF cap at 1.2 levels and reduced the interest rate by 50 basis points to -0.75% in order to avoid inappropriate tightening of monetary conditions.
Following the announcement, the Swiss Franc gained strength against the EUR,; up 16% at one point, while it gained 16% against the US dollar. Moreover, the interest rate cut failed to avoid sharp appreciation in Swiss Franc, which may lead to an inappropriate tightening of monetary conditions. Thus, gold prices fell sharply in CHF terms.
Gold (CHF) Technical Levels
The immediate resistance is seen at 1120, above which the metal could gain to 1250 levels. Meanwhile, support is seen at 1060 and 950 levels.
Gold in CHF terms or XAU/XHF currently trades 12.06% lower at CHF 1100.68/Oz levels, compared to the previous close at USD 1251.66/Oz levels. The SNB abandoned the 4-year long EUR/CHF cap at 1.2 levels and reduced the interest rate by 50 basis points to -0.75% in order to avoid inappropriate tightening of monetary conditions.
Following the announcement, the Swiss Franc gained strength against the EUR,; up 16% at one point, while it gained 16% against the US dollar. Moreover, the interest rate cut failed to avoid sharp appreciation in Swiss Franc, which may lead to an inappropriate tightening of monetary conditions. Thus, gold prices fell sharply in CHF terms.
Gold (CHF) Technical Levels
The immediate resistance is seen at 1120, above which the metal could gain to 1250 levels. Meanwhile, support is seen at 1060 and 950 levels.