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Gold is traded above first support $1310

Feb 6 2019, 02:20 AM (CST) | Fortfs.com

On Tuesday gold market traded in pretty limited price range retaining the sideway orientation but managed to end the day with slight gain. The most interesting point is that quotes managed to close the day above $1310 and this is important technical sign.

USD dollar is still the most important driver for the precious metal and being somewhat positive for the last two days, dollar provided a rather good pressure for the gold. Yesterday USD dollar continued to gain along with US equities and the bond yields, which greatly limited the ability to recover the price of the yellow metal, since all these factors make gold less attractive for investment. In addition, traders mostly ignored the publication of weaker data on the US non-manufacturing ISM index (business activity index) (fact 56.7, forecast 57.2, previous 58.0 points).

On Wednesday, the main market topic is US President Donald Trump's speech to the US Congress, but in fact, his speech had little or no effect on trading. Unexpectedly there were no surprises in Trump’s speech. He devoted the first part of his speech to enumerating his achievements in economics. Later he briefly touched on the topic of trade relations with China, noting that the trade deal should include “real structural changes that will help the US reduce its trade deficit. Trump also announced that he plans to hold another meeting with North Korean leader Kim Jong-un on February 27-28, and does not intend to make concessions on the issue of building a wall on the Mexican border. That’s it, no surprises and no sensations.

However, we have a very intense trading session ahead in term of news schedule. We will look into information on retail sales, orders for durable goods, and data on GDP for the fourth quarter, the trade balance, etc. All these data can have a very strong influence on the course of trading so will provide insight on the state of the American economy.

On the chart, the situation has not changed since the beginning of the week. Gold is now traded in very tight range around $1310-$1315.

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