As a result of trading on Thursday, gold lost in price more than 1% against the background of a continuing bull trend in the dollar.
Since there are no external catalysts on the market, the main factor influencing the dynamics of gold is the US currency, in which the precious metal is nominated. Despite the publication of weak data on US GDP for the 4th quarter of 2018, the dollar index maintained an upward movement, thanks to the weakening of other world currencies. According to the report presented yesterday, US GDP growth in the last quarter of 2018 was only 2.2%, compared with the forecast of 2.4%.
As a result, we are now seeing an actual repetition of the situation of the past year, when it was the US dollar, rather than gold, that investors perceive as the safest asset, with the difference that in 2018 investors actively bought the dollar avoiding the risks associated with the aggravation of the situation in world trade, and in 2019, the dollar is bought trying to protect itself from the risks associated with a slowdown in the growth of the global economy.
Why do investors opt for the dollar? This is primarily due to the fact that there are no other alternatives in the foreign exchange market right now. The European currency and the Japanese yen, in view of the serious problems in the economy and the very soft policy of the Central Banks, are not able to compete with the US dollar. Therefore, the demand for US currency remains high, the dollar is growing, which makes gold a less attractive asset for investment due to the high purchase price.
Today, the dollar competition, in terms of influence on the precious metals market, will be composed of geopolitical news. First, investors are waiting for the first results of a new round of US-Chinese trade negotiations. Secondly, another vote should take place this evening in the British Parliament according to the Brexit plan agreed with the EU. In a large block of statistics from the US, it is worth highlighting data on personal consumption expenditures and new home sales.
On the hourly chart we mark the exit downwards of the price from the ascending channel, which raises a big question about the ability of the instrument to continue moving upwards. Inside the day, you can count on a corrective pullback from the level of 1293.00, where the price is now, to the level of 1300.00. It is at the level of 1300.00 the further short-term price vector will be determined. On the daily chart, Gold still holds the potential to continue medium-term growth and at least retest the level of 1350.00, but this option will be relevant as long as the price is above the level of 1285.00. Breaking down of this mark will mean a change in the medium-term trend from ascending to descending.
Resistance Levels: 1300.00, 1313.00, 1318.00;
Support levels: 1293.00, 1285.00, 1250.00.
The main scenario - a correction to 1300.00.
Alternative scenario - fixing below 1293.00 and a decline to 1285.00
Locally, gold remains under strong pressure, so intraday shorts of the instrument remain relevant. The nearest entry point is to look at 1300.00.
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