The price of gold has been rallying higher for the last week as the green bucks lost most of their bullish strength in the global market. The price of gold found some fresh buying pressure in the global market after it hit the critical support level at 1202.44 on the daily chart. In the daily chart, the precious yellow metal has breached the 200-day SMA resistance level, after Mr. Trump’s statement went public to stop Obama’s healthcare program. Since the price of gold is measured in U.S dollars, a slight variation in the value of the green bucks’ strength significantly affects the gold market. Though we have a breaching of the 200-day SMA, the upbeat housing data release in the U.S economy imposes a fresh selling pressure to the gold market. Most of the gold investors are in doubt regarding the next developments, as the U.S economy is totally uncertain at the current time. The recent performance of the U.S economy is not up to the market but some of the leading investors are still expecting stronger green bucks in the upcoming days. If a FED chairperson manages to hike their interest rate for the third time this year, we will see a dramatic drop in the price of gold in the global market.
Drop in gold price in Asian trading session
The bulls of the gold market have been turned down by the dollar bulls in the Asian trading session, as the green bucks gained a decent strength after the 1.25M housing data release. According to the Comex division of the New York Mercantile Exchange, the price of gold traded at 1238.48 with the loss of 0.28%. Though the price of gold went down in the Asian trading session, the price of copper went up by 0.22% and traded at $2.713 per pound. If the FED tightens their monetary policy by raising their interest rate for the third time this year, the bears of the gold market will have a safe haven. But things might get overly complicated under the new administration of Mr. Trump, as no one is certain regarding his next move. The delay of increment of the fiscal spending pushed the dollar significantly lower in the global market, which helps the precious yellow matter to rally higher. The recent down fall of the U.S dollar index to its six month low also created an extreme level of buying pressure in the gold market.
U.S pending rate hike decision
The new U.S government has given many hopes to its citizens, but most of them are yet to be implemented. The sentiment of the U.S consumer has turned out extremely negative after Mr. Trump failed to implement his tax cut policy. On the contrary, FED officials are working hard to hike their interest rate for the third time so that the central bank can adjust their current inflation rate. However, the recent decline in the average hourly income of the U.S consumer has created a doubt in the mind of leading leaders regarding the third rate hike program by the FED. Some of them are considering this two-rate hike as an immature decision by the FED as their economy is still not doing well. Most of the leading investors are now eyeing the U.S unemployment claim data. Stronger data will fuel the gold bears and push the price of gold significantly lower. However, a negative data release will change the whole scenario as the dollar bulls will be wiped out from the market for this week, and this will eventually lead the price of gold towards the dynamic resistance level of 100 days SMA on the daily chart.
Overall market condition
The global financial market is now facing an extreme level of uncertainty due to the ongoing crisis in both the U.S and European economy. Compared to the U.S economy, the European economy is doing relatively well in recent days, and most of the investors are thinking that the EURO will be trading higher for the rest of this month. Currently, the leading investors are waiting for the ECB press conference where Mario Draghi will declare their policy to bring stability in their economy. Though most of the professional researchers are expecting a steady market during the ECB interest rate decision, things might drastically change upon the speech of Mario Draghi. In today’s BOJ monetary policy meeting, the low yielding Japanese Yen lost most of its bullish strength in the global market. Though the U.S dollar is trading significantly higher after the upbeat housing data, the bullish strength of the green bucks is now subject to unemployment claims data. Compared to the currency market, the commodity market is relatively stable as the price of gold is respecting all the technical levels without any wild spikes. Despite the recent bullish run in the price of gold, the sellers might take control of the market any time now, so it’s better not to get lost in gold at the current price level.
The precious yellow matter is now trading at a critical level and it’s holding its steady gain for the last week. Most of the professional investors are currently waiting on the sidelines to get a clear clue regarding the green buck’s strength. The ongoing crisis in the U.S economy is fueling up the gold bulls, but an imminent rate hike from the FED will erase most of the gains of this gold market. On the contrary, Obama’s healthcare program is also facing a severe threat under Mr. Trump’s administration, and this has also created negative consumer sentiment in the U.S economy. However, three high officials in the White House have already protested this decision, which is a sign of relief for the dollar bulls.