Gold remains under strong pressure due to the strengthening of the US currency. The dollar index has five trading days in a row closed with growth, while maintaining good opportunities to continue this trend. Since the yellow metal is denominated in dollars, gold becomes more expensive for many investors, which has a negative effect on the level of demand.
On Tuesday, the dollar received the main support from the publication of very good data of internal statistics. According to published information, non-manufacturing PMI from ISM for the month increased from 56.7 to 59.7 points, exceeding the forecast level of 57.3 points. Sales of new housing increased to 621 thousand compared to the forecast of 600 thousand and last month’s level of 599 thousand. Only the PMI data of the service sector turned out to be slightly worse than the forecast value, the fact is 56.0, the forecast is 56.2, but the deviation was not so significant to have an impact on the course of trading. The publication of good domestic statistics reinforces investors' confidence that the US economy is in very good condition and is able to maintain current growth rates even with the background of the influence of external negative factors. Therefore, many investors remain confident that in 2019 the Fed can resume the process of normalizing interest rates.
The decline in the value of gold yesterday could have been stronger if support had not been provided by the stock market. US indices finished trading with a slight decrease with the background of lingering concerns about global economic growth. A decrease in indices always leads to an increase in demand for risk-free assets, gold, Japanese yen, etc., due to which at the end of the trading day the precious metal managed to win back part of the lost positions.
Today, the dynamics of the dollar index will remain in the center of investors attention, because now it is a key factor influencing the gold quotes. According to the economic calendar, a monthly ADP employment report will be published in the US today, which forms market expectations before the main report from the US Department of Labor is published. Also today, the data on the trade balance and the Beige Book of the Fed will be presented. Perhaps some impact on the trading will be provided by speeches of FOMC representatives Williams and Mester.
On the chart today we see the attempts to resume upward movement. It should be noted that the probability of forming a full-fledged reversal formation at current levels is very high, since yesterday a strong medium-term support range of 1285.00-1288.00 was tested. The price bounced up from it and today we are waiting for the further development of the bull wave.
Resistance Levels: 1290.00, 1299.00, 1310.00;
Support levels: 1287.00, 1284.00, 1280.00.
The main scenario - growth in the direction of the level of 1299.00.
An alternative scenario - fixing below 1287.00 and a decline to 1280.00.
Gold is still under pressure, but on the chart there are certain prerequisites for the formation of a reversal. Therefore, today, preference should be given to longs that should be looked for in the range of 1285.00-1287.00
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