Gold Technical Analysis: Holding to the $1400 Peak - 27 June 2019
For the second day in a row, the price of gold reached $1400 an ounce awaiting stronger catalysts to continue the recent winning streak which hit the resistance level of $ 1439 per ounce during Tuesday's session, the highest level of the yellow metal for six years. The last correction is very natural and we have pointed out that gold has reached strong overbought areas and can be corrected at any time, at the same time, we still prefer to buy gold from a bearish level. Continuing global trade and political tensions along with the falling US dollar means further gains for gold prices. Gains will be have important date this week for the meeting between US President Trump and Chinese President Xi to determine the future of their trade war, which clearly contributes to slowing world economic growth and has helped pressure central banks to ease monetary policy. The agreement between the two parties means more risk appetite and therefore gold abandoning its recent gains.
We have confirmed in recent technical analysis that US interest rate cut signals will support the decline of the US dollar and further gold gains, which actually happened after the Federal Reserve announced its monetary policy. The bank stressed the possibility of a US interest rate cut, did not set a date for that and left it linked to economic developments. The recent performance of the gold price confirms our expectations that buying from each bearish level will be the best strategy for dealing with the yellow metal.
Weak US job and inflation numbers will increase pressure on the US Federal Reserve. The price of the yellow metal is still moving within the ascending channel supported by the move above the psychological resistance at $ 1300.
In the last meeting, 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 so far to raise inflation to the bank's target. 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: Gold prices today confirm the strength of the bullish move around and above the psychological peak at $1400, and therefore the nearest levels of resistance might be 1415, 1425 and 1433 respectively, which were already reached and holding to it with the recent correction with profit taking through sales. On the downside, the nearest support levels for gold today are 1400, 1389 and 1370, respectively. We still prefer to buy gold from every bearish bounce.
In terms of economic data: the yellow metal will have all its focus on the US dollar level. Gold will also be affected by investors' risk appetite, as gold is one of the most important safe havens.
- Currency Pairs