While the euro and the pound are growing again in the foreign exchange market, the dollar is in no rush to retreat against the yen and gold, which are asset-seekers. So, with the opening of today's trading day after the active decline in the day before, the pair XAU / USD is trading in a narrow range near the level of 1276.00 dollars per troy ounce. If the pound and the euro are moving at the moment in the foreign exchange market according to their scenario, the precious metals and, in particular, gold, after reaching the local annual highs at the beginning of this week, stopped rising.
If the elections in France are completed safely for the euro, i.e. If candidates from the extreme left and extreme right do not win, then the situation in the financial markets will calm down a little. The threat of a sovereign default of France and its withdrawal from the EU will be lifted.
Nevertheless, while the uncertainty with the elections in France exists, as well as the threat of sales of France's sovereign debt of about 1 trillion euros, gold will not be cheaper, despite the Fed's plans to tighten monetary policy and reduce its budget.
Boston Federal Reserve Bank manager Eric Rosengren said on Wednesday that the Fed should begin the process of reducing its asset portfolio "the sooner, the better." This will allow the Fed to raise short-term interest rates without harm to the economy, according to Rosengren. He also noted that the interest rate should be the "main mechanism" affecting the state of the US economy. Thus, the Fed continues to receive signals for a gradual tightening of monetary policy in the US.
Gold is cheaper in the situation of an increase in the interest rate in the US, t. It is difficult for him to compete with interest-bearing assets. The cost of its acquisition and storage with a tightening of monetary policy is growing.
The restraining factor from the decline in the price of gold is still geopolitical instability in the world and the position of US President Donald Trump, who repeatedly spoke in favor of a cheap dollar. In a recent interview with the Wall Street Journal, he said that the dollar "is becoming too strong" for US goods to compete successfully in the market.
Of the expected news for today, it is worth paying attention to data from the United States. At 12:30 (GMT), a weekly report from the US Department of Labor on the number of new applications for unemployment benefits is published. According to the forecast, the number of benefits is expected to increase to 242,000 (against 234,000 last week). If the data turn out to be worse, it will negatively affect the dollar, and vice versa, a low result will strengthen the dollar.
During the period from 15:30 to 17:30, several key figures of the world financial market, Bank of England Chairman Mark Carney and US Treasury Secretary Stephen Munchin are expected to perform. In this period of time, a surge in volatility is expected across the financial market, including XAU / USD.
Support and resistance levels
With the opening of today's trading day, the pair XAU / USD is trading near support level 1277.00 (Fibonacci level 61.8% correction to the wave of decline since July 2016 and EMA144 on the 1-hour chart).
Indicators OsMA and Stochastics on the 1-hour, 4-hour and daily charts are deployed to short positions.
In case of breakdown of support levels 1277.00, 1274.00 (EMA200 on the 1-hour chart), the decline in the pair XAU / USD will accelerate. The immediate targets will be support levels 1260.00 (February and March highs), 1253.00 (EMA200 on the 4-hour chart), 1248.00 (Fibonacci level 50.0%). Fixing of XAU/USD below the levels of 1235.00 (EMA200 on the daily chart), 1220.00 (Fibonacci level of 38.2%) will cancel the uptrend.
Nevertheless, while the pair XAU / USD is above the support level of 1248.00, it keeps positive dynamics. The closest target in the case of continued growth of the pair XAU / USD will be the level of 1300.00. But for this, the pair XAU / USD needs to gain a foothold above the local maximum near the 1292.00 mark (April highs).
Support levels: 1277.00, 1274.00, 1260.00, 1253.00, 1248.00, 1235.00, 1220.00
Levels of resistance: 1287.00, 1292.00, 1300.00
Trading Scenarios
Sell Stop 1273.00. Stop-Loss 1284.00. Take-Profit 1260.00, 1253.00, 1248.00, 1235.00, 1220.00
Buy Stop 1284.00. Stop-Loss 1273.00. Take-Profit 1290.00, 1300.00, 1305.00
