The growth of the dollar and the investor’s appetite for high risk did not allow gold to maintain the positive trend and for the first time this week the yellow metal closed with a decline.
Unexpectedly, for many traders, the US dollar was able to restore all positions that were lost after the end of the FOMC meeting, at which the regulator conducted an in-depth review of its monetary policy and announced the end of the interest rate increase cycle that lasted more than three years. The recovery of the dollar was promoted by both technical factors (on the eve the dollar index updated it’s bottom of February 4), and a strong weakening of other major currencies, primarily the pound and the euro.
Pressure on the yellow metal also made a positive investor sentiment on the stock markets. Despite the high risks associated with the possible collapse of the US-China trade negotiations and the uncertainty about Brexit, the major indices in the United States ended the day with good growth, which lowered investor interest in defensive assets.
Today, gold is regaining its position with reduced pressure from the dollar, which remains the main driving force in the precious metals market. Despite a fairly strong correction, in the long run, the US currency will remain under strong pressure from monetary policy changes by the Fed. Against this background, gold retains very good opportunities for the continuation of the bull trend, since yesterday's movements have not changed the situation on the market globally.
In matters of geopolitics today, the EU summit and news about the course of trade negotiations between the US and China will remain in the spotlight of traders. According to economic statistics, attention should be paid to the publication of preliminary data on PMI manufacturing and services sectors in Europe and the USA, as well as data on sales in the secondary housing market in the United States.
Yesterday for gold, we saw quite a strong corrective pullback, after testing an intermediate resistance level of 1320.00. But, as part of the correction, the sellers failed to achieve any significant success. Buyers retained the main intermediate support levels and retained the overall structure of the upward price channel, which is developing on H1. Accordingly, in the long term, the priority remains with the scenario of the growth in the direction of the level of 1350.00.
Resistance Levels: 1320.00, 1330.00, 1340.00;
Support Levels: 1305.00, 1300.00, 1295.00.
The main scenario - the resumption of the upward movement and retest level 1320.00.
Alternative scenario - consolidation below 1305.00 and decrease to 1300.00
Despite yesterday's pullback, fundamental and technical analysis still indicates the urgency of the bull trend in this instrument. Therefore, preference is given to longs that can be searched near the level of 1307.00.
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