Last week, gold spent in a tight range on the background of general uncertainty in world markets. The main factor affecting gold remains the same - US dollar, which is locally under pressure amid internal and external factors since the beginning the of the year.
Recently, Fed has significantly changed the market expectations, as officials are making more and more cautious statements regarding further terms, and this is a very strong negative signal for the dollar, and a strong long-term support factor for the yellow metal. Therefore, this week, the market focus will be upon USD dollar as well. Next week several FED representatives will speak, which can further strengthen investor confidence that at the current stage the Fed is suspending the cycle of interest rates for an indefinite period.
Negotiations between the United States and China have become another important topic of the past week. According to both sides, the meeting in Beijing ended very successfully and laid the foundation for the negotiation at a higher level. This brought back some optimism in equities but did not generate any sell-off in gold. This is a kind of sign that gold has a strong ground under feet. And this is due to the fact that investor concerns related to the future prospects of the global economy has a more long-term nature and is one of the main factors for gold support, as many investors buy as protection against heightened risks.
As for data front of the upcoming five days, this week will be somewhat a bit quitter then the previous week
On Monday, we can expect relatively calm trading, since the market is not expected to publish important economic reports.
On Tuesday, all investors' attention will be directed to Brexit vote in the UK Parliament. On the same day, ECB President Draghi’s speech is scheduled to take place in Strasbourg. In the United States on this day the producer price index will be published, as well as a member of the FOMC George will give a speech.
On Wednesday in the United States should be published a report on retail sales.
On Thursday, a meeting of Central Bank heads of the 20 leading countries of the world is to be held in Tokyo. In the United States on this day there will be published a report from the Federal Reserve Bank of Philadelphia.
The trading week will be ending amid a preliminary report on consumer sentiment in the United States.
On the chart, the price consolidation continues in the range of 1280.00-1300.00, but the general structure of the bullish wave, which may soon be continued, remains. The scenario of new upward momentum and rising prices remains a priority. An additional signal confirming the further price increase should be a breakdown of strong local resistance at 1300.00. In the long term, the target for the growth of quotations is the range of 1350.00-1360.00.
Resistance levels: 1300.00, 1310.00, 1315.00;
Levels of support: 1281.00, 1278.00, 1270.00.
The main scenario - more attempts to consolidate above 1300.00 before some serious corrective pullbacks
An alternative scenario - consolidation below 1280.00 and decrease to 1270.00.
Bulls manage to keep the price at maximum levels, while the fundamental background in the market remains moderately positive, so the longs of this instrument remains relevant. Potential entry points should be found near the level of 1280.00.