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Gold has a good chance to rebound ahead of weekend

Jul 20 2018, 02:13 PM (+06) | Fortfs.com

On Thursday the gold market was trading under pressure amid USD dollar gains. Gold has updated the annual minimum, as US currency has updated its highs since July 2017.

USD positions were strong throughout the week after the Fed chief confirmed that the regulator intends to continue the current monetary policy.

Regarding the trade relations issue the focus was on the confrontation between the US and Europe. On Wednesday, Trump again criticized Europe and threatened with the introduction of duties on cars. The EU stated back about measures on United States. The growth of trade tension between countries affects the equities as well as the commodity market and even exerts pressure on gold, which usually acts as a defensive asset.

It is likely that gold would have continued to trade at new yearly lows but Donald Trump continues to amaze everyone with his statements. This time, American president violated a long tradition, in which the leaders of the White House did not comment on FOMC monetary policy. Yesterday, in an interview with CNBC, Trump said that he was "not happy" with the Fed's rate hikes.

The market reacted to this comment by a serious weakening of the dollar. As a result, gold within an hour managed to win back intraday losses, but later could not hold on to the achieved levels and slightly rolled back lower. Now investors are trying to understand the consequences of such a statement.

It is evident that Trump doesn’t feel good about strong dollar when searching for international trade advantages, higher rates reduces the competitiveness of American exporters, given strong weakening of the renminbi in recent weeks. However, it will be extremely difficult for Trump to take FRS under control, and many experts suggest that the Fed will continue to implement the current policy.

On Friday, there are no important economic news, so geopolitics will have a dominant influence on the session. Investors will expect some sort of official explanation regarding the comments made previously by the US president. Therefore, gold gets a good opportunity to recover some ground.

On Thursday the gold market was trading under pressure amid USD dollar gains. Gold has updated the annual minimum, as US currency has updated its highs since July 2017.

USD positions were strong throughout the week after the Fed chief confirmed that the regulator intends to continue the current monetary policy.

Regarding the trade relations issue the focus was on the confrontation between the US and Europe. On Wednesday, Trump again criticized Europe and threatened with the introduction of duties on cars. The EU stated back about measures on United States. The growth of trade tension between countries affects the equities as well as the commodity market and even exerts pressure on gold, which usually acts as a defensive asset.

It is likely that gold would have continued to trade at new yearly lows but Donald Trump continues to amaze everyone with his statements. This time, American president violated a long tradition, in which the leaders of the White House did not comment on FOMC monetary policy. Yesterday, in an interview with CNBC, Trump said that he was "not happy" with the Fed's rate hikes.

The market reacted to this comment by a serious weakening of the dollar. As a result, gold within an hour managed to win back intraday losses, but later could not hold on to the achieved levels and slightly rolled back lower. Now investors are trying to understand the consequences of such a statement.

It is evident that Trump doesn’t feel good about strong dollar when searching for international trade advantages, higher rates reduces the competitiveness of American exporters, given strong weakening of the renminbi in recent weeks. However, it will be extremely difficult for Trump to take FRS under control, and many experts suggest that the Fed will continue to implement the current policy.

On Friday, there are no important economic news, so geopolitics will have a dominant influence on the session. Investors will expect some sort of official explanation regarding the comments made previously by the US president. Therefore, gold gets a good opportunity to recover some ground.

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