Gold Price Analysis: The Best Opportunity for Stronger Gains - 27 May 2019


The results of the European elections, the Brexit trajectory after May's resignation and the continuation of US-Chinese trade tensions are all likely to support stronger gains for gold and stabilize prices at around $1,287 an ounce at the time of writing the analysis, with gains for the third day in a row. The abandonment of the US dollar slightly gave the price of an ounce of gold the opportunity to move higher and after losses pushed the price of the metal to move towards the support level of $ 1269 an ounce. The recent downward movement in the price of the ounce of gold was confirmed after the announcement of the US Federal Reserve meeting’s minutes, which confirmed the desire of some Bank members to raise the US interest rate, which supported the gains of the US dollar and will not strengthen the upward correction without testing the psychological peak at $ 1300 and getting established on top of that.

The US dollar was second only to the Japanese yen in gaining as a safe haven as the US-China trade war recently intensified. In general, the absence of a final and formal agreement that ends the trade dispute between the United States and China will continue to be a factor contributing to stronger gold price gains, and establishing above the psychological peak of $1,300 will increase purchases and test stronger bullish levels. Trump's recent comments, which bear the prospect of reconciling with China after raising tariffs on their products, have eased investors' concerns and have contributed to a halt in gold price gains.

The Federal Reserve Board kept the interest rate unchanged as expected and indicated it was unlikely to raise or lower interest rates in the coming months amid signs of renewed economic health while at the same time inflation was still unusually low. The Bank's policy statement highlighted its continued failure to raise the annual inflation rate to at least 2%. The statement may have raised expectations that a change in the next Fed interest rate is a rate cut to stimulate inflation or growth.

Technically: If gold prices stabilized today below $1300, it will increase the bearish momentum and the nearest support levels will be 1273, 1265 and 1258 respectively, which support the strength of the bearish trend while at the same time levels can be bought for close targets. On the upside, the nearest levels of gold resistance are currently 1286, 1300 and 1312, respectively. We still prefer to buy gold from every bearish bounce.

In terms of economic data: The yellow metal will all focus on the US dollar level. Gold will also be affected by investors' risk appetite. Gold is one of the most important safe havens.


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