Fundamental analytics

Gold is waiting for signals from the Fed


On Tuesday, gold was trading in different directions and finished trading with a slight increase. The lack of trend dynamics of the market is explained by the fact that investors are now waiting for signals from the Fed about future plans to change the monetary policy.

Yesterday, the main event of the economic calendar was a speech by Jerome Powell at a banking conference in Boston, but the Fed chief disappointed traders because he did not touch on monetary policy in his speech. Among other representatives of the Fed, the most interesting comments were given by Patrick Harker, who said that lowering the rate would not be a mistake for the Fed, but the best option now is to wait. At the same time, Harker noted that when making decisions on the rate, FED does not discuss the political pressure that is being put on officials from the White House.

Today, gold is trading with a decline. A moderate pressure on the yellow metal is exerted by the US dollar and reports of a telephone conversation between Vice-Premier of China Liu He, US Trade Representative Robert Lightheiser and US Treasury Secretary Stephen Mnouchin. But the main event of the day will be the speech of the Fed Chairman in the US Congress, which may shed light on further actions of the regulator on the implementation of monetary policy, as well as the minutes of the last FOMC meeting. Traders expect the interest rate to drop by 25 bp at the July meeting, and the future direction of the market will depend on whether Powell confirms these expectations, or refutes them.

On the chart, the initiative locally belongs to sellers. The price is gradually pressed to the level of 1383.00. This is not the first retest of this mark, so the probability of its breakdown is very high. A further vector of price movement will depend on whether the bears will be able to consolidate below this level or not. If successful, we expect further development of the downward wave to the level of 1360.00.

Resistance Levels: 1397.00, 1415.00, 1438.00;

Support levels: 1383.00, 1360.00, 1332.00.

The main scenario is the breakdown of support at 1383.00 and further development of the downward movement.

The alternative scenario is a false breakout of the level of 1383.0 and an increase to 1415.00.

A moderately negative news background dominates the market locally. On the chart, the initiative belongs to the sellers. Intra-day preference is given to shorts from resistance levels of 1397.00 and 1415.00.



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