As a result of trading on Tuesday, gold slipped by more than 0.5% amid pressure from the dollar and some reduction in demand for defensive assets.
Despite the release of weak domestic statistics, the US dollar on Tuesday was able to complete trading in the green zone due to the weakening of other G7 currencies and a decrease in concerns related to a possible lower interest rates in the US in 2019. If on Monday the probability of a rate reduction in the current year was estimated at 72%, then on Tuesday it dropped to 66%.
Another strong pressure factor on gold on Tuesday was the situation in the stock markets. The market as a whole is looking forward with optimism to a new round of trade negotiations between the United States and China, which increases investors' appetite for risk. The European and US stock market completed yesterday's trading in the green zone, which always negatively affects the demand for the yellow metal.
On Wednesday, the situation has not changed much. The dollar and the growth of major stock indexes put pressure on gold. This morning, the dollar index was supported by comments from the RBNZ, in which the regulator did not rule out the possibility of lowering the interest rate in New Zealand. In response to these messages, the national currency slipped against the US dollar by more than 1.5%.
There are not so many important economic news today. Among the most significant events can be identified only the speech of Mario Draghi and other ECB officials at the event in Frankfurt. In the United States today will be published the latest data on the trade balance. The main influence on trading will likely be provided by geopolitical news and trading dynamics on stock exchanges.
On the hourly chart, gold is still moving in the upward price channel, but in recent days there has been an increase in pressure on the lower border of the channel, which increases the likelihood of its breakdown and the development of downward movement. Therefore, in the coming days you should pay attention to the local area of support 1310.00-1313.00. Breakdown of this range downwards may provoke a strong decline in quotations to 1300.00 and below. If buyers manage to keep the price above this range, we should expect further development of the bullish movement with the target 1350.00.
Resistance Levels: 1318.00, 1325.00, 1330.00;
Support levels: 1313.00, 1310.00, 1300.00.
The main scenario - a decline to 1310.00.
An alternative scenario - consolidation above 1318.00 and growth to 1325.00.
Locally, gold is under pressure by fundamental background, which can trigger the development of a fairly strong bearish wave. But on the chart, the situation is not so unambiguous, the price remains in the ascending channel, so long from the level of 1310.00 still retain their relevance.
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