Monthly reviews

March brings new prospects for gold, as charts assumes another storm of $1365 zone


The last February week was successful for gold as the market finished it in the green. First two days of the new month were positive sessions as well. However, the gold market failed to fully recover from the last decline that occurred earlier in February (the pullback from $1363 to the $1300 zone), and based on monthly close candle we can say that February turned out to be a negative month for the gold. During February, the price of yellow metal declined from $1361 to a minimum of $1306. However, most importantly, contrary to our expectations, the market again failed to storm the strategic zone $1361- $1365 and move higher up to $1400.

March begins positively. Gold retain a good potential for further growth, on the background of an interesting fundamental situation. The gold market is mainly benefiting from the weakness of the US dollar, the deterioration of the global market sentiment and the possible escape from risk. Following Trump's statements on the introduction of import duties on steel and aluminum in the US, the demand for gold rose amid a general decline in global risk interest, weakening of US currency and outflow of the capital into risk-free assets - gold, the Japanese yen. We can say that the risks of protectionism and worsening prospects for the global economy are a good medium-term signal for the gold market.

Unexpected statements by Trump made investors forget the speeches of Jerome Powell, which significantly increased the expectations on the number of possible interest rate hikes. Attention is now directed to the response measures of the EU and other countries, therefore in such a situation the precious metal will probably continue its slow gains.

The European Union stated that in the coming days it will consider possible retaliatory measures. Officials closely follow the situation in the WTO, they also expressed concern about the statements of the US president.

Among other news events, which can greatly affect the alignment of forces, there is a report on US employment for February, which will be traditionally published on Friday, March 9. In the case of strong data, the pressure on gold may increase amid strengthening of USD dollar.

From a technical point of view, the situation on the chart continues to be positive for further growth and another storm of the strategic resistance zone around the level of $1365. The market has designated a medium-term wide range ($1365 - $1302) in which the price is kept for three months since December 2017. Psychological support $1300 looks very stable. The market starts the new week near the balance level within the specified medium-term channel - $1325. The nearest serious resistance is around $1344, then the strategic resistance zone is located $1360 - $1365, the breakthrough of which will open the pace to the nearest resistance levels already in the $1432 area.

If we consider the situation with the medium-term forecast for the March. We certainly can not exclude the probability of storming the level of $1365 (strategic resistance), with the subsequent access to operational space up to the levels of $1400. We have expected the implementation of the scenario for the first two months of 2018, but the market situation in recent months is very volatile, and so far this scenario has not materialized, despite our expectations and many factors and prerequisites supporting our expectations. Therefore, at the beginning of February, we take a conservative position and we assume that in March precious metal price will remain within the range of 1300-1365 with local attempts to storm the upper limit of the range. Medium-term long positions might be be interesting in the area of ​​the lower boundary of the designated channel - this is $1300 - $1308 zone.