After a small correction, gold closed the second week in a row with growth, maintaining good opportunities to continue the upward movement. The focus of investors is still on the US-Chinese trade negotiations, as well as the dynamics of the dollar. Both of these factors have a major effect on the yellow metal.
On Friday, the President of the United States, Donald Trump, made a statement in which he said that he was ready to postpone a new increase in duties on Chinese goods, in case of substantial progress made at the talks in Washington. Investors are still optimistic about the possibility of concluding a trade agreement between the two countries, which significantly limits the possibilities for growth in gold prices, the demand for which decreases with a decrease in geopolitical tensions and risks.
Gold can still hold the multi-month highs with the help of the US dollar, that ended last week with a slight decrease of 0.4%. The main influence on the US currency in the near future will be provided by the data of internal statistics, that the Federal Reserve uses as a guide in adjusting the parameters of the monetary policy.
The upcoming trading week will be very full of important news events, so the volatility of trading can increase significantly.
On Tuesday, bidders are awaiting the report on construction and the data on the consumer confidence index. But the Fed’s monetary policy report, which Jerome Powell will submit to the US Senate Banking Committee, may have a much greater impact on the market.
Another speech by Jerome Powell is scheduled for Wednesday, before the relevant committee of the US Congress. On the same day, data on the volume of industrial orders and pending sales in the real estate market will be presented.
On Thursday, data on PMI of the manufacturing and services sector in China will definitely attract investors' attention. In the US, all attention is focused on the report on GDP growth for the fourth quarter, the publication of which was postponed due to the shutdown at the beginning of this year. Later in the day, Jerome Powell will give a speech again.
On Friday in the United States will be published data on the price index of personal consumption expenditures, as well as the PMI of the manufacturing sector from ISM.
On the chart, we see attempts to resume upward movement, after a fairly strong correction in the second half of last week. The quotes were mainly supported by the level of 1325.00, that also plays a good basis for the formation of a reversal. The immediate taeget for growth is the level of 1340.00. But if buyers are going to continue the medium-term trend the main target for them now will be the level of 1350.00. The retest of this level this week is very likely to happen.
Resistance Levels: 1335.00, 1340.00, 1350.00;
Support levels: 1325.00, 1315.00, 1310.00.
The main scenario - growth to 1340.00
Alternative scenario - consolidation below 1330.00 and decline below 1325.00
At the beginning of the week, the news background for this instrument remains neutral, but on the chart there are signals indicating continued growth of quotations, so we prefer buying within the day. Entry points should be found near the level of 1330.00.
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