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Gold has returned to local highs amid weaker USD dollar

Jan 10 2019, 03:15 AM (CST) | Fortfs.com

After several days of correction, gold resumed its upward impulse. On Wednesday, the yellow metal moved up by more than 0.5% and so far continues the positive dynamics on Thursday.

Like throughout of the week the main driver of growth was the US dollar, which continued the downward movement, as following yesterday's trading, sank more than 0.7%. Investors focused on the minutes of the December FOMC meeting, which showed that the Fed will not raise rates in the coming months, as the regulator intends to analyze the impact of negative factors related to the slowdown in the global economy, problems associated with international trade and high volatility in stocks. The Fed is very concerned about the impact of the above negative factors on the US economy, so the timing of further tightening of monetary policy has become more uncertain. Many experts now say that the current interest rate increase cycle can be fully completed.

Investors paid much attention yesterday to the US and Chinese trade negotiations in Beijing. Expectations of a quick solution to this problem negatively affected the dynamics of gold movement, but the first round of in-person talks this year ended without a big breakthrough. The parties managed to agree on a number of controversial issues, to solve the most important problems a new stage of negotiations is needed at a higher level. Therefore, it became obvious that at least the negotiation process will last until the end of the 90-day truce announced in December, and one should not exclude the need to extend this period to resolve differences. Optimism in the market was replaced by moderate disappointment, which again makes gold the most attractive asset for reducing trading risks.

Today, gold was supported by weak statistics from China. Inflation in the Asian country continues to decline, which is a direct result of reduced demand amid slowing growth in both the global economy as a whole and the Chinese economy in particular.

According to the economic calendar, traders today will focus upon the minutes of ECB December meeting, as well as the speech of Fed Chairman Jerome Powell at an event in Washington. Preliminary for today it is planned to publish data on housing statistics in the US, but due to problems with the approval of the budget for the current year, the publication of data may again be postponed to a later date.

After several days of correction, gold resumed its upward impulse. On Wednesday, the yellow metal moved up by more than 0.5% and so far continues the positive dynamics on Thursday.

Like throughout of the week the main driver of growth was the US dollar, which continued the downward movement, as following yesterday's trading, sank more than 0.7%. Investors focused on the minutes of the December FOMC meeting, which showed that the Fed will not raise rates in the coming months, as the regulator intends to analyze the impact of negative factors related to the slowdown in the global economy, problems associated with international trade and high volatility in stocks. The Fed is very concerned about the impact of the above negative factors on the US economy, so the timing of further tightening of monetary policy has become more uncertain. Many experts now say that the current interest rate increase cycle can be fully completed.

Investors paid much attention yesterday to the US and Chinese trade negotiations in Beijing. Expectations of a quick solution to this problem negatively affected the dynamics of gold movement, but the first round of in-person talks this year ended without a big breakthrough. The parties managed to agree on a number of controversial issues, to solve the most important problems a new stage of negotiations is needed at a higher level. Therefore, it became obvious that at least the negotiation process will last until the end of the 90-day truce announced in December, and one should not exclude the need to extend this period to resolve differences. Optimism in the market was replaced by moderate disappointment, which again makes gold the most attractive asset for reducing trading risks.

Today, gold was supported by weak statistics from China. Inflation in the Asian country continues to decline, which is a direct result of reduced demand amid slowing growth in both the global economy as a whole and the Chinese economy in particular.

According to the economic calendar, traders today will focus upon the minutes of ECB December meeting, as well as the speech of Fed Chairman Jerome Powell at an event in Washington. Preliminary for today it is planned to publish data on housing statistics in the US, but due to problems with the approval of the budget for the current year, the publication of data may again be postponed to a later date.

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