2019-11-11 • Updated
Last week was very promising for the gold bulls as the price managed to recover after the significant fall towards $1,200 on November 12. The price for 1 ounce stuck above $1,214 on Friday. What are the reasons behind this rise and where the gold is heading during this week?
The US Dollar suffered losses after the Fed raised concerns about a global economic slowdown. The potential slowdown might mean the tightening policy of rate hikes will be impossible in the current economic conditions. Moreover, the Fed has a neutral outlook beyond 2018, which will attract gold buyers interested in the safe-haven asset.
In addition, the tensions between the US and China, which increased during the APEC negotiations, added uncertainties to the market. US vice president Mike Pence warned APEC nations against taking Chinese loans. At the same time, Chinese president Xi expressed his negative opinion on US tariffs. The disagreement on WTO reforms led countries to failure on reaching a consensus on the final statement after two days of speaking. This situation also generated the capital inflows into the yellow metal.
As there are no major market-moving economic releases this week from the US, the direction of the price for the safe haven asset depends a lot on the market sentiment.
On Tuesday, the huge sell-off across the equity markets resulted in the capital outflow from the shares. S&P 500 fell by 0,78%, while tech-heavy Nasdaq declined by more than 3% due to the slowdown in consumer sales and regulation fears.
If the risk-off sentiment across the equity market continues to escalate, the price for gold will rise.
Let’s look at the technical levels of the US Dollar and gold.
The US 10-year treasury yields keep sliding. It fell by 0.29% on Monday. That is why the risks of the US Dollar index to test the support at 95.85 increase and, therefore, can help XAU/USD to rise towards the resistance at $1,232. If this strong level is broken, the gold price can test the next resistance at $1,243. However, the strong USD can move the US Dollar index upwards to the resistance at 96.70. In that situation, the price for yellow metal will likely go down. If the support at $1,214 is crossed, the next important level lies at $1,185.
To conclude with, it is highly important to follow the situation in the equity market and the price of the US Dollar index to trade gold in the most successful way during this week.
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Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.
Bearish scenario: Sell below 1.0820 / 1.0841... Bullish scenario: Buy above 1.0827...
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