Gold bed on the lips of the Fed

After a prolonged fall in September, the gold returns to the game and develops over the course of three trading sessions in a row amid growing uncertainty around North Korea and Catalonia. Russian officials assured that it is ready to launch a long-range missile, after the visit to Pyongyang. In addition, the President of Catalonia, signed the Declaration of Independence. At the same time, Catalonia has postponed its own action with the subject of negotiations with Madrid. All of these bring confusion to the market and increase the demand for safe-haven securities. On the hand of the «bulls» of the XAU / USD pair, the correction of the dollar rate in the first half of the fall will also be a factor.

It is the weakness of the dollar, because of the disappointment with Donald Trump policy and the lack of confidence in the third increase in the federal funds rate in 2017, which has allowed the precious metal to skyrocket to the maximum of its mark for the year. However, the joy of the «bulls» was short-lived. The tax reform that has been brought to the attention of the public, the return on the market the idea of the revival of the trade, and the increasing likelihood of the Federal Reserve’s tightening of monetary policy in 2017, has caused the gold has lost about 6% of its value, dropping from 31% to 88%. The situation is painfully similar to that which emerged after the presidential elections in the US, last fall. Then, the faith of the investors in the dispersion of the us economy to 3% to lower the price of XAU / USD 10%. Is that history repeats itself?

The dynamics of gold and the US dollar

Source: Financial Times.

The «bulls» it is necessary to believe that this is not so. In their opinion, it is extremely unwise to speak of the restoration of the upward trend on the dollar index. The indicator reached 14 years of age at the beginning of 2017 because of the divergence of monetary policy of the Fed and other central banks issuing the currencies of the G10. Currently, the acceleration of the global economy from 3.6 to 3.7% (IMF projections for 2017-2018), the victory over deflation, and the improvement of the situation on the labour markets throughout the world, has created a solid foundation for the increase of rates in other countries. Yes, gold has plunged in an environment that is unfavourable to itself, when the Fed has turned a blind eye to the slow pace of inflation and continued the cycle of the normalization of monetary policy. This has led to an increase in the real yield of the bonds. However, Washington has repeatedly emphasized its desire for a slow process of currency restriction, and Donald Trump does not hide that he is a supporter of low interest rates and the weakness of the dollar. This allows us to hope for the resumption of the upward trend in the XAU / USD pair to overcome the sum of $ 1,400 per ounce in 2018.

The «door» of the gold, on the other hand, believe in a happy resolution of the conflicts surrounding North Korea and Catalonia, and the situation of the american economy. If the GDP really accelerates to 3%, the Fed can increase the rate with a clear conscience, to 2.75% or more. This is because the faster that the GDP, the cost-effectiveness of investment projects should be.

Technically, the break of the rising channel negotiation refers to the hope of the restoration of the «bullish» trend in the precious metals. However, in order to confirm the seriousness of their intentions, buyers should take over the resistance at $ 1298-1302 per ounce and keep the quotes above.

However, the daily chart

Добавить комментарий