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Is it a new Gold Era?

Discussion in 'Current Market Sentiments' started by fx-recommends, Jul 20, 2015.

  1. fx-recommends

    fx-recommends Content Contributor

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    XAUUSD could rebound to be trading above $1100, after being exposed to profit taken following rising of the selling momentum on falling of last Nov. 7 support at $1132.

    The gold touched in the beginning of Asian session $1073.95 which has been the lowest level since Feb. 7,2010, before a try to fix its oversold stance over the short term put it back for trading just above $1100.

    The Forex market has directed the attention to the interest rate outlook differential which supported the greenback versus the major currencies by the end of last week, after Yellen's testimonies last week which paid the attention to the labor market improving suggesting gradual pace of tightening can start next September to not be forced later to push the interest rate up faster.

    The Fed is taking into its account the low inflation pressure currently on the low oil prices but later in first quarter of next year this situation should be different on elimination of the oil prices slide impact.

    June US CPI came by the end of last week to show yearly rising by only 0.1% following no change in May but with excluding the food and energy, we can see that the rate rose by 1.8% after 1.7% in May.

    The gap between the broad inflation figures and the core figures should be tighter in the beginning of next year, when the falling of the oil prices in the beginning of this year is expected to be digested.

    US PCE which is the Fed's favorite gauge of inflation came previously to show rising by only 0.2% in May and also in April, while the Fed's yearly inflation target is 2%.

    The Fed can start tightening taking this low inflation level as a reserve can help it later to halt hiking in the case of facing economic slowdown, as there is no high inflation pressure on it to raise rates.

    While the main factor which is expected to move the Fed next is the US GDP which has shrunk in the first quarter by 0.2% on harsh winter following growth by 2.2% in the last quarter of last year.

    Last year, the US economy has faced also harsh winter leaded to annualized shrinking in the first quarter of last year by 2.1%, before recovery in the second quarter by 4.6% in the second quarter and 5% in the third quarter.

    The case is not expected to be the same this year with higher greenback value and low inflation level which can lead to lower rebound.

    So, The Fed is showing now that it is waiting for reliable rising of the economic activity can raise the inflation expectations up and give hope for reaching its yearly 2% goal over the medium level as it aims.

    US Q2 GDP is expected to be pretty much important to the markets and the Fed, as the lower economic activity can weigh down further on the inflation and direct the Fed to hold the interest rate at the current low level since December 2008 with current tame inflation pressure on it.


    From another side, the gold was receiving several hits from lower geopolitical concerns after Iran deal which lowered also the prices of the energy prices putting pressure on the Gold.

    The Greek deal lowered also the worries about facing financial instability in EU making the worst looking behind at least at this stage of the Greek crisis which has not leaded to Grexit yet.

    While the risk appetite and also the greenback were looking gathering momentum, after the release of good housing sales data in June by the end of last week and also magnificent rally of Google share supported Nasdaq Composite suggesting increasing probabilities of watching higher US Treasuries yields in the next period by God's will.

    Technically, XAUUSD is now can continue to be exposed to further loses, stop loses orders and increasing downside momentum, after breaking 1132 which could cap its falling on Nov. 7 to prop it up to $1307 whereas the gold formed another lower high on last Jan. 22.

    The gold is increasingly exposed to forming another downside wave, after ending consolidation above $1132 which was the lowest level since the falling from its all times high at $1921 which has been recorded in September 2011.

    $1000 psychological level can be initial target of the sellers, while the way up is in need now for more reasons to take place, as the containing power is struggling suggesting forming lower highs probabilities.


    Have a good day


    Kind Regards

    FX Market Strategist

    Walid Salah El Din

    Mob: +20 12 2465 9143

    E-Mail: mail@fx-recommends.com

    http://www.fx-recommends.com
     
  2. vic84

    vic84 New Member

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    Gold prices have been down a lot and investment of lot of trader have been in negatives.
     
  3. fx-recommends

    fx-recommends Content Contributor

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    as you can see that i have warned of getting gold long recently.
     

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