Gold finished trading on Friday with a very strong increase and won back all losses of the beginning of the trading week. Such a strong rise in prices was due to the fall of the dollar and the yield of US Treasury bonds, despite the publication of a fairly good report on the US labor market. The pressure on these two instruments was exerted by a public discussions between senior representatives of the White House and the Fed, which broke out on Friday after the publication of the labor market report. Officials argued about how the economy should be managed in conditions of strong growth and very low unemployment. US Vice President Mike Pence and White House economics adviser Lawrence Cudlow called on the Fed to lower interest rates to further stimulate the economy and keep inflation near target values. In response, Fed officials defended the current monetary policy, noting that there is now no reason to change the level of interest rates.
Today the market has forgotten about the Friday battles of the Fed and the White House, since on Sunday another Twitter message from Donald Trump gave a new surprise to investors. Trump wrote that he plans to increase the duty on imported Chinese goods to 25%, which was previously subject to duties of 10%, and will introduce a duty of 25% on new goods worth $ 325 billion. These comments came as a complete surprise, not only for financial markets, but also for Chinese officials who are considering the abolition of the next round of talks to be held in Washington this week. Trump's unexpected statements sharply increased the demand for risk-free assets such as gold and Japanese yen, which today are trading in the green zone. The topic of trade relations between the United States and China will remain at the center of attention of financial markets today, since there are no important events in the economic calendar that could have a strong influence on trading.
Buyers managed to defend support at 1270.00, forming a fairly strong and convincing pullback up. Now trading takes place above 1279.50, which makes the scenario with the further development of the bullish movement with targets at 1287.50 and 1294.00 levels relevant. Accordingly, it is reasonable to consider selling this instrument only after fixing below 1279.50.
Resistance Levels: 1287.50, 1294.00, 1310.00;
Support levels: 1279.50, 1270.00, 1263.50.
The main scenario - growth to 1287.50.
An alternative scenario - consolidation below 1279.50 and decrease to 1270.00.
The market is now dominated by a positive news background, which is also reflected in the price chart. Therefore, intraday preference is given to long positions that are worth looking for near the 1279.50 level.