On Tuesday, gold continued to trade sideways with borders at levels 1325-1335, ending the day with a slight increase, less than 0.1%. At the same time, for the most part of the day, the instrument was trading in negative zone. Gold managed to win back the losses closer to the end of the trading, when the American dollar eased the pressure.
The main event of the day yesterday was the speech of Fed Chairman Jerome Powell to the Senate Banking Committee with a semi-annual report regarding the regulator’s performance. In his speech, Powell said that the regulator will not rush to increase interest rates and will direct its main efforts to assess the impact of negative factors on the US economy. Now interest rates are in the neutral range, and inflationary pressure remains insufficient to resume the rate hike cycle. The current state of the US economy is assessed as good, and the development prospects are quite favorable, but fears are caused by increasing downward risks, which are mainly associated with external factors of influence. In general, Powell in his speech did not say anything new, but the markets received another confirmation that the Fed will not make changes in its monetary policy in the near future, which is a serious support factor for gold that is very sensitive to Fed policy.
Further weakening of the dollar and the yield of treasury government bonds will increase investor interest in gold, especially during periods of aggravation of the geopolitical situation in the world.
Today, bidders are awaiting a new speech by Jerome Powell, this time for the relevant committee of the Congress. Most likely his report will contain a minimum new information, so the impact of this event on the market will be minimal. The focus of investors will remain on the US-China trade negotiations, which continue in Washington, as well as the situation with the declaration of a state of emergency in the United States. This morning, the House of Representatives by a majority vote adopted a bill to block Trump's initiative, and investors monitor how the situation will develop further.
On the chart we note a minimum changes. Bidding is still in the range with borders at the levels of 1325.00-1335.00. When the price will come out of the side is difficult to determine, but given the direction of the global trend, we can designate the most likely direction of exit from the price channel. The priority is the exit from the side channel upwards, with the breaking of the upper resistance limit at 1335.00 and an increase in the direction of 1350.00.
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 - the continuation of the the channel 1325.00-1335.00
In general, the news background for the instrument remains moderately positive. Therefore, in the sidestream that develops on the chart, preference should be given to longs that need to be considered near the lower boundary of the price channel 1325.00-1335.00.
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