On Monday, gold finished trading with a slight decline, amid the recovery of major stock indices. But, this morning, the price resumed its upward movement, thanks to the support of important fundamental factors.
First, in the run-up to the Fed meetings, investors continue to bet that under current economic conditions, regulators will pursue a softer monetary policy to maintain high growth rates. According to the CME Group, the market expects the regulator to keep rates unchanged in June, but will lower it at the July meeting. This is a strong bullish signal for gold, which will become a more attractive investment target than American treasuries and the dollar.
Secondly, there is still a high demand for defensive assets in the market, in view of growing tensions in international relations. Now traders are discussing a possible escalation of the trade conflict between China and the United States, amid the latter’s intentions to supply weapons to Taiwan in the amount of $ 2 billion. Some representatives of the White House believe that these actions by the United States may prevent Trump and Xi Jinping from meeting at the G20 summit in Japan in late June.
Therefore, in the current situation, gold retains a very high chance of continuing the bull trend.
In the economic calendar, among the most significant events today is the publication of data on inflation in the EU and ZEW institute indices for Germany, as well as statistics on the US construction sector.
On the chart, the price very quickly rebounded from the previously indicated support level of 1332.00. This is a good bullish signal, which significantly increases the likelihood of further development of the upward movement in the direction of 1360.00 and above. The short-term target for the bulls is the range of 1351.00-1355.00.
Resistance Levels: 1351.00, 1355.00, 1360.00;
Levels of support: 1338.00, 1332.00, 1321.00.
The main scenario - a correction to 1338.00 and the resumption of the upward movement.
An alternative scenario - consolidation below 1338.00 and retest 1332.00.
For gold, the fundamental background will remain positive. The chart is dominated by bullish signals. Inside the day, we consider the possibility of entering long positions from the levels of 1338.00 and 1332.00.