The second consecutive day, gold completes trading with a negative result, being under pressure by the dollar, which continues to recover its position on the world stage.
Yesterday, the dollar was supported by data on the trade balance, as well as comments by the head of the Federal Reserve Bank of Dalas, Kaplan, who reassured the markets, saying that the Fed has no reason to consider a possible reduction in interest rates in the United States. Recall that last week the probability of a possible reduction in the level of rates in the United States was estimated by the market at 80%, which put considerable pressure on the dollar. This week, these concerns began to decline, after the publication of some data of internal statistics and statements by representatives of the Fed.
Another factor that helps the strengthening of the dollar is the rather weak positions of other major world currencies. The US economy has turned out to be more resistant to the effects of external negative factors, and the Fed's policy, despite the recent changes, remains more rigid than the actions of other Central Banks. These considerations increase investor’s interest in the dollar. The growth of the dollar leads to a rise of gold price, which is denominated in US currency, which, according to the laws of the market, helps reduce the demand for this asset.
Today, gold is trying to regain lost ground, but the potential for price growth remains limited. The US currency is likely to remain as the main driver of movement in the precious metals market, since today the United States publishes final data on US GDP for the fourth quarter of 2018. In case of big deviation of the actual figures from the forecasted level of growth 2.4%, the direction of market can change significantly.
The influence of geopolitical factors on the market will gradually increase as a new round of trade negotiations between the US and China starts today, but most likely, some important news about the course of negotiations will appear on the market only tomorrow. Reuters, referring to representatives of the United States, announced that the parties had managed to achieve significant progress in all areas under discussion.
On the daily chart, despite the local decline in quotations, the situation has not changed significantly. The price continues to move within a developing bull wave, the structure of which is not yet broken. Accordingly, the main medium-term target for the movement is the level of 1350.00. If we consider the situation more locally, then today it is worth paying attention to the strong intraday resistance level of 1313.00. If the price fails to overcome it, the downward movement will most likely be continued, with the target of 1300.00.
Resistance Levels: 1313.00, 1318.00, 1325.00;
Support levels: 1310.00, 1300.00, 12850.00.
The main scenario - a decline to 1300.00.
An alternative scenario - consolidation above 1313.00 and an increase to 1318.00.
Fundamental analysis and technical analysis signals point to a further decline in gold prices, therefore, within the day, we give preference to shorts that are worth looking for near the 1313.00 level.
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