Trading recommendations Buy Stop 1180.00. Stop-Loss 1170.00. Objectives 1185.00, 1189.00, 1220.00, 1234.00, 1248.00, 1255.00 Sell in the market. Stop-Loss 1180.00. Objectives 1172.00, 1162.00, 1128.00
Overview and Dynamics As shown by published on Wednesday, reports the December Fed meeting, there was “considerable uncertainty” regarding how Trump policies affect economic growth in the country. Although FOMC members noted that the proposed fiscal stimulus (infrastructure spending and tax cuts) can support economic growth in the coming years, however, “it is not known which of these measures will be taken and how such changes may affect the prospects for the economy”. Especially Fed officials worried about the situation in the first year of the presidency of Donald Trump.
The dollar fell sharply on the foreign exchange market after the publication of FOMC minutes.
WSJ dollar index fell by 0.6%, to 92.99. Gold futures on Wednesday rose against the weakening US dollar. The February gold futures on the COMEX closed at 1165.30 dollars per troy ounce. Economic and geopolitical risks can support gold prices this year and next year. Unclear prospects for the impact of the economic policy of the new government in the US economy, the elections in a number of Eurozone countries (including Germany and France) can lead to an increase in demand for safe-haven assets, including precious metals.
Investors expect three more rate hikes in 2017 by 0.75 percentage points. This increase in the interest rate will be negative for gold prices. Gold does not bring interest income and interest rate increases the cost of its acquisition and storage grow.
Thus, the political and economic uncertainty, as well as the rate of increase in interest rates in the US will be the main driver for gold in 2017.
It is likely that the price of gold at the end of last month reached the bottom, and can pretty strong growth in the price of gold prices.
Since the beginning of the same year and with the opening of today’s trading session, the price of gold rising quotations. Spot price of gold at the beginning of the European session is near the level of 1178.00.
Technical analysis On the 4-hour and daily chart indicators OsMA and Stochastic are on the side of buyers. On the weekly chart indicators are also beginning to unfold in long positions. On the 4-hour chart the pair XAU/USD has broken through the resistance level of 1172.00 (EMA200 upper uplink line) and a pair of upward dynamics is preserved.
Price increases in the direction of the nearest resistance level of 1185.00 (23.6% Fibonacci level of the correction to the wave decline from July 2016).
The pair XAU/USD on daily chart is in a downward channel with the lower boundary, passing near the level of 1085.00. Break of the support level of 1128.00 (minimums 2016) resumes the downtrend pair XAU/USD, which began in October 2012.
Alternative scenario implies an increase in XAU/USD pair to the key level of 1234.00 (EMA200 and the upper limit on the daily chart the downward channel). But it is possible to return only after rising above the level of 1189.00 (EMA50 daily chart).
Break of the resistance level of 1234.00 will create prerequisites for the growth to the levels of 1255.00 (EMA200 on the weekly chart), 1276.00 (61.8% Fibonacci level).
Support levels: 1172.00, 1162.00, 1128.00 Resistance levels: 1185.00, 1189.00, 1220.00, 1234.00, 1248.00, 1255.00, 1276.00
XAU/USD Weekly Chart
XAU/USD Daily Chart