Gold Market Prospects - Is It Time To Buy Again?

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Gold Market Prospects - Is It Time To Buy Again?



It looks like today's "golden question" is a widespread issue that worries the entire market. Is it time to open the longs now, and what will happen with the next gold ?. Will the market present a lower price, or is the current level attractive. The geopolitical situation remains unpredictable, and the current growth of equity will sooner or later expire, and be replaced by fixation of profit and decline. Therefore, gold is a market that everyone sees, and almost all traders and investors are interested.

Gold found support in the $ 1260 area, showing two positive sessions in early October and gaining strength, the market began to talk that a long-awaited reversal finally took place and the market found its end. Then the market moved up through a very important historical area: the $ 1290- $ 1295 level, and the bullish mood just increased. However, this week the US dollar is back in strength, the yellow metal failed to strengthen at the level it achieved, falling under pressure and down into the $ 1280- $ 1285 zone.

The correlation between gold and the US dollar is always interesting. This determines the dynamics of the gold market, which historically establishes the behavior of the gold market as dependent, as gold has an inverse correlation with the dollar. As the dollar increases, the value of gold in the market grows, and its demand is corgressively declining, which in turn leads to a fall in prices. Conversely, a weakening US dollar makes gold more attractive for longs and causes prices in the market higher.

The explanation is as follows: non-dollar gold buyers can buy more US dollars for each unit of their currency, allowing them to buy more gold at a lower price. As always, the real driving forces of the gold market, and other markets are fear and uncertainty, defined in financial markets as a concept of volatility.

The next major factor that always affects gold is geopolitics and market uncertainty. Geopolitical uncertainty, as well as tensions between North Korea and the United States or the escalation of terrorist threats, is a driving force in the demand for protective assets. If the geopolitical uncertainty factor remains outside the analysis area, then we have several opportunities to analyze the dollar market.

The Fed's closest meeting will be held on December 13, 2017, and will likely result in a 25 basis point increase in the federal funds rate. If this happens, the market will get an additional boost to buy the US dollar, which should put pressure on gold. However, do not forget that the market price in such a major event. And most likely this hope has been appreciated at the current level. A few weeks ago, when expectations of rate hikes were somewhat lower than today (according to the CME), the dollar index traded at 94 points. Today, the dollar index is trading at 93.44, and the possibility of an interest rate hike in December is estimated at 91.7% according to Fed Watch's CME guidelines. Thus, we can assume that the expectation of the next rate hike is already in the price. In recent months, the growth of the US dollar is a major factor of pressure on gold.

Will gold growth continue in late 2017 and start in 2018?

We think that gold's position is strong enough and its growth will continue. Even without taking into account geopolitical risks. The equity market continues to update the highest value of history, and gold is always used as a stock balancer. The fixation of gains in the stock market will lead to higher gold demand. The yellow metal is an ideal safe-haven asset when there is a decline in the stock market. The expected growth of US inflation is also a factor that supports gold. From the technical side, the current situation is very interesting to open longs mid-long. Level 1275-1280 is a strong support zone. We do not think that the market will show lower prices. When the market strengthens above 1285-1290, it will attract investors and short-term players who are less risky. Anyway, there will be another price!

Published: By: senang hati - Oktober 21, 2017

BMFN Market Notice

Due to North Korea confirming 6th nuclear test (hydrogen bomb) we expect much higher volatility that may cause extreme moves in the market. This will likely widen the spreads and reduce the liquidity. Major commodities such as gold might be affected the most.

Please manage your Risk accordingly.

Published: By: senang hati - September 03, 2017

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03 August 2017

English لقراءة النسخة العربية، يرجى النزول لأسفل الصفحة

Key resistance positioned at 1.1885 Yesterday, the Euro strengthened against the US dollar and touched its highest level since January 2015, after St. Louis Federal Reserve (Fed) President, James Bullard, stated that the central bank should halt interest rate hike moves in the near term, amid persistently low inflation. On the 1H chart, the pair is trading with a slightly upside bias, ahead of the European Central Bank’s (ECB) economic bulletin and key economic releases in Germany and Eurozone, to be published today. Intraday resistance is placed at the 1.1885 level, followed by the 1.1910 and crucial 1.1950 levels. A surge above the latter might trigger further positivity in the pair. However, the MACD indicator is moving downwards, suggesting at a likely intraday correction in the pair. Key support is aligned at the 1.1820 level where EMA 55 is trading, followed by the 1.1785 and 1.1745 levels.

Strong if breaks above 22150 Yesterday, the Dow Jones index achieved the psychological 22,000 milestone for the first time ever, and finished in the green at 22016.24, amid a jump in the shares of Apple Inc. as investors continue to cheer the strong quarterly earnings results. At present, the index is trading with a slightly bullish tone on the 1H chart, reflecting at a positive technical picture. Also, the MACD indicator is tranquil above its midline, further confirming the above stance. Key resistance is situated at the crucial 22050 level, followed by the 22100 and 22150 levels. A surge above the latter might trigger further strength in the index. However, formation of bearish divergence conditions on the MACD chart, suggests that the index might soon witness a near-term correction. Key support is located at the 21965 level, followed by the 21940 and 21890 levels.

Positive if breaks above 1.3315 The Pound traded higher against the US Dollar in the prior session and settled at 1.3223, brushing off data that indicated a sharp fall in the British construction activity to its lowest level in eleven months in July. Currently, the pair is placed above its short-term and long-term EMAs, suggesting at a bullish technical scenario. Moreover, the MACD indicator is placed above its midline, further supporting the above stance. Traders would eye the Bank of England’s (BoE) interest rate decision and services PMI data in the UK, due for release later today. Important resistance is situated at the 1.3245 level, followed by the 1.3280 and 1.3315 levels. A break and stability above the latter might lead to further bullishness in the pair. Conversely, key support is seen at the 1.3195 level, followed by the 1.3170 and 1.3140 levels.

Weak if breaches below 7385 The FTSE 100 index traded in the red in the last session, weighed down by losses in financial sector stocks. Moreover, Standard Chartered emerged as the top index loser, as investors were disappointed by a lack of dividend despite a strong first-half result. As visible on the 1H chart, the index is trading below its short-term and long-term EMAs, ahead of the earnings report of Shire Plc, Aviva Plc and London Stock Exchange Group Plc, to be released shortly. Besides, the MACD indicator is trading below its centreline, further elaborating the above stance. Intraday support is positioned at the 7385 level, a breach below which might lead to further bearish pressure on the index, clearing its way for the crucial 7350 and 7320 levels. On the bright side, key resistance is located at the 7445 level, followed by the 7470 and psychological 7500 levels.

Bullish if breaks above 111.65 Even though the US private employers added less number of jobs than expected in July, the US Dollar finished in positive territory against the Yen in the last session and closed at 110.72. As of now, the pair is trading with a positive tone on the 1H chart, ahead of the factory orders and durable goods orders data to be released in the US, later today. In addition, the MACD indicator is likely to witness a signal line crossover from below, further validating the above stance. The key technical barrier is located at the 111.00 level where EMA 200 is placed, followed by the 111.30 and 111.65 levels. A sustained break above the latter might prompt further strength in the pair. Meanwhile, key short-term support is aligned at the 110.55 level where EMA 55 is located, followed by the 110.25 and 109.90 levels.

Bearish if breaches below $1254 The precious metal advanced in the previous session and closed at $1271.80, led by a drop in the US Dollar to its lowest level in fifteen months, following weak labour market data in the US. At present, the yellow metal is trading in a downward trending channel on the 1H chart, reflecting a bearish technical outlook for the coming session. Additionally, the MACD indicator is sharply heading south, further endorsing the above view. Key technical support is situated at the $1260 level where EMA 200 is located, followed by the $1257 and $1254 levels. A move back below the latter might trigger downside momentum in the Gold. On the positive side, intraday resistance is aligned at the $1265 level, followed by the $1268 and $1272 levels. A surge above the latter might generate further positivity in the yellow metal.

Weak if breaches below $51.85 The Brent Crude traded with a bullish tone in the prior session, on the back of reports from the Energy Information Administration (EIA) that showed a fall in the US crude oil inventories in the last week. As of now, the commodity is trading in a narrow range of $52.10-$52.30 on the 1H chart, hinting the presence of consolidation in the coming session. However, a possible signal line crossover by the MACD indicator from above, suggests at likely correction over intraday basis. Key near-term support is seen at the $51.85 level, a breach below which might lead to bearish momentum in the Brent crude, paving way for the $51.55 and $51.15 where EMA 200 is located. On the other hand, the key technical obstacle is positioned at the $52.45 level, followed by the $52.75 and $53.10 level.

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Published: By: senang hati - Agustus 03, 2017