Morning outlook - XAU/USD surges by 1.8%
Due to another round of heated rhetoric between Donald Trump and Kim Jong Un, the yellow meatal appreciated against the buck by 0.93% just in one hour and then continued the surge. As a result, the pair started new trading session above the 200-hour and the 61.8% Fibonacci retracement level, which previously formed strong resistance.
On the one hand, the rate could continue the soar and try to reach the 1,290.00 mark, using a barrier-free area in its favour. This assumption is additionally supported by the fact that fears over war on the Korean peninsula haven’t gone anywhere yet. On the other hand, after such sudden and massive loss, the buck traders inevitably are going to try to restore lost positions. There is a need to remember that the pair is still expected to reach the bottom edge of dominant channel up.
Due to another round of heated rhetoric between Donald Trump and Kim Jong Un, the yellow meatal appreciated against the buck by 0.93% just in one hour and then continued the surge. As a result, the pair started new trading session above the 200-hour and the 61.8% Fibonacci retracement level, which previously formed strong resistance.
On the one hand, the rate could continue the soar and try to reach the 1,290.00 mark, using a barrier-free area in its favour. This assumption is additionally supported by the fact that fears over war on the Korean peninsula haven’t gone anywhere yet. On the other hand, after such sudden and massive loss, the buck traders inevitably are going to try to restore lost positions. There is a need to remember that the pair is still expected to reach the bottom edge of dominant channel up.
Comment:
XAU/USD awaits Fed decision
In result of the previous trading session, traders with bullish outlook pushed the pair simultaneously from larger descending and minor ascending channels. The surge was based on increasing tensions between the US and North Korea. However, near the weekly R2 at 1,294.86 it made a rebound, as markets started to worry about the upcoming Fed Meeting Minutes.
Given the importance of this event, the pair is expected to move horizontally until 18:00 GMT. Fortunately for the gold, the southern side is protected by a combined support set up by the weekly R1 at 1,285.75 and the 55-hour SMA. If signals from the Fed will be hawkish, the rate most probably is going to fall to an intersection of the 100-, 200-hour SMAs and the 61.8% Fibonacci retracement level near 1,278.90
In result of the previous trading session, traders with bullish outlook pushed the pair simultaneously from larger descending and minor ascending channels. The surge was based on increasing tensions between the US and North Korea. However, near the weekly R2 at 1,294.86 it made a rebound, as markets started to worry about the upcoming Fed Meeting Minutes.
Given the importance of this event, the pair is expected to move horizontally until 18:00 GMT. Fortunately for the gold, the southern side is protected by a combined support set up by the weekly R1 at 1,285.75 and the 55-hour SMA. If signals from the Fed will be hawkish, the rate most probably is going to fall to an intersection of the 100-, 200-hour SMAs and the 61.8% Fibonacci retracement level near 1,278.90
Comment:
XAU/USD trades at 1,294.86
In line with expectations, the pair continued to move in a limbo between the weekly R1 and R2 in anticipation of release of the FOMC meeting minutes. As soon as it became clear that there remains some uncertainty about the upcoming interest rate hike, the buck started to lose value against the gold. As a result, the rate reached and even slightly overstepped the 1,294.86 mark.
Accordingly, the pair is likely to continue the surge at least in the first half of the day before the US PPI data release. This assumption is partially based on the 55-hour SMA, which is rising together with the pair, and partially on two recently formed ascending channels. However, the fact that an area near 1,295.50 is blocked by the 55-day SMA suggests that the rate might be actually forced to turnaround.
In line with expectations, the pair continued to move in a limbo between the weekly R1 and R2 in anticipation of release of the FOMC meeting minutes. As soon as it became clear that there remains some uncertainty about the upcoming interest rate hike, the buck started to lose value against the gold. As a result, the rate reached and even slightly overstepped the 1,294.86 mark.
Accordingly, the pair is likely to continue the surge at least in the first half of the day before the US PPI data release. This assumption is partially based on the 55-hour SMA, which is rising together with the pair, and partially on two recently formed ascending channels. However, the fact that an area near 1,295.50 is blocked by the 55-day SMA suggests that the rate might be actually forced to turnaround.
Because of the robust demand on gold from two largest Asian countries as well as continuous fears related to the North Korean crisis, the exchange rate continued to head to the top towards the 1,290.00 target.
During the surge, the pair has even formed a minor rising wedge pattern whose breaking point is located exactly near the above mark. In addition to that, there is a need to take into account that an area near the 1,294.00 level represents a location of the 55-day SMA.
Hence, one of those technical barriers is likely to turnaround the pair and gives it an impulse to continue to plunge towards the bottom edge of a senior ascending channel. However, if geopolitical situation continued to be as intense as it is now, investors will continue to seek safe heavens, such as gold.