Tuesday trading, gold has finished growth of almost 0.7% and today again continues the positive momentum of the movement. Now you can identify two main factors that contribute to the growth in demand for the yellow metal - a dollar price decline and a change in sentiment in the stock markets.
Pressure on the US currency yesterday was caused by data on the consumer price index. The base rate of inflation (g / g) decreased from 2.2% to 2.1%, and (m / m) dropped from 0.2% to 0.1%. Experts expected that both indicators will remain at the level of previous reporting periods. This is quite a strong negative signal for the dollar, as a reduction in inflationary pressure will be a serious deterrent for the Fed when it comes to resume the US interest rate cycle. As a result, the dollar index ended yesterday’s trading with a decline of almost 0.3%.
The stock market yesterday did not show a uniform movement. European indices ended yesterday's trading lower, while the British stock market showed moderate growth. In the US, the S & P 500 and Nasdaq rose 0.3-0.4%, while the Dow Jones lost 0.4% in price. Investors' sentiment was strongly influenced by two factors - a vote on Brexit in the UK Parliament, and a ban on the operation of the Boeing-737 Max 8 and Boeing-737 Max 9 over the EU airspace. The growth of negative sentiment in the market stimulates investor interest in more reliable assets, such as gold and the yen.
Today, the focus of investors will again be on news from the UK, where the issue of withdrawing from the EU without an agreement will be put to the vote. In the US, investors are awaiting the publication of data on producer price index and durable goods orders.
On the graph we see the reversal formation in action, which was formed at the end of last week. From the four-days range 1284.00-1291.00 the price went up, clearly denoting the priority of its further medium-term movement. This was followed by a retest of the upper limit of the range, from which the price resumed its growth. Now we can expect further development of the bull wave with the immediate target at the level of 1310.00.
Resistance Levels: 1310.00, 1315.00, 1320.00;
Support levels: 1298.00, 1290.00, 1285.00.
The main scenario - growth to 1310.00.
An alternative scenario is the breakdown of intraday support at 1304.00 and a decrease to 1298.00.
A positive news background has formed on the market. There are good mid-term signals on the chart indicating price increases. But to consider buying at current prices is quite risky. The closest strong support level near which you can search for entry points is at 1298.00.