XAU/USD: investors prefer safe havens

XAU/USD: investors prefer safe havens

6 June 2017, 11:35

The dollar continues to be under pressure following Friday's disappointing US labor market data for May. As you know, despite the fact that the unemployment rate in the US fell by 0.1% to a level of 4.3%, the NFP was significantly below the forecast. The number of jobs outside of US agriculture in May increased by 138,000 compared with April (the forecast was +184,000).

Against the backdrop of a number of political and economic events that have recently occurred and are expected this week, investors prefer to withdraw their savings into safe haven assets - government bonds, yen, precious metals.

Strengthening tensions in the Middle East around Qatar, a number of recent terrorist attacks in Britain, lower expectations of budget stimulation of the US economy, the expectation of the speech of former FBI director James Komi before the US Congress on Thursday, as well as parliamentary elections in the UK and the ECB meeting also scheduled for Thursday - here are the main geopolitical risks that increase the demand for gold and other safe assets.

Gold enjoys strong demand even though the probability of an increase in the interest rate in the US next week is estimated by investors higher than 90%. As you know, higher interest rates make dollar assets more attractive to investors, and lead to the sale of gold. This precious metal does not bring interest income and can not compete with assets that generate such income, for example, government bonds. At the same time, the cost of acquiring gold and its storage is growing.

And, nevertheless, the increased geopolitical risks promote active purchases of gold.

So, at the beginning of today's European session, gold is trading near the level of 1288.00 dollars per troy ounce, which is $ 20 or 1.5% higher than the opening price of the current month.

At the same time, the index of the dollar WSJ, which reflects the value of the US dollar against the basket of 16 other currencies, fell to a value of 88.16, approaching the levels where it was before the victory of Donald Trump in the November 8 elections.

It is likely that before June 8, when the elections to the British Parliament and the ECB meeting on monetary policy are held, the pair XAU / USD will maintain a positive trend with a propensity for further growth.


Support and resistance levels

Having rebounded from the support level of 1220.00 (the lower border of the rising channel on the daily chart and the Fibonacci level of 38.2% correction to the wave of decline since July 2016), since the middle of last month the pair XAU / USD continues to grow actively within the upward channel on the daily chart.

The nearest target and resistance level of 1292.00 (Year and April highs) can be passed to the nearest trading session. A more distant goal is the resistance level of 1305.00, just above which the upper limit of the ascending channel passes on the daily chart. The highs of the previous wave of growth of the pair XAU / USD are near the level of 1370.00.

Indicators OsMA and Stochastics on the 4-hour, daily, weekly charts went to the side of buyers.

The reverse scenario is related to the return of the pair XAU / USD to support level 1277.00 (Fibonacci level 61.8%) and further decrease to support levels 1257.00 (EMA200 on 4-hour chart), 1248.00 (Fibonacci level 50%). Breakdown of the key support level of 1240.00 (EMA200 on the daily chart) will increase the risks of a return to the downtrend.

Support levels: 1277.00, 1261.00, 1257.00, 1248.00, 1240.00, 1220.00, 1200.00, 1185.00

Resistance levels: 1292.00, 1305.00


Trading Scenarios

Sell ​​Stop 1278.00. Stop-Loss 1293.00. Take-Profit 1270.00, 1257.00, 1248.00, 1240.00

Buy Stop 1293.00. Stop-Loss 1278.00. Take-Profit 1305.00, 1400.00

*) Actual and detailed analytics can be found on the Tifia website at tifia.com/analytics

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