Spot gold opened the Tokyo session on gains from $1195 New York, closing to $1202 during the Tokyo session. The precious metal may be ranging around 1203-1195 awaiting Trump Day this Friday as other pairs such as yen pairs are also ranging awaiting Friday’s uncertainty.
Fundamentally gold and the yen are safe havens and yen pairs such as EUR/JPY, AUD/JPY and CHF/JPY (to name a few) are ranging mainly because Trump’s policies put "America First" and that has proven good for the USD during elections but as Trump failed to clarify on market related matters last week Friday leaves certain instruments mixed and awaiting fundamental stimulus which may be the reason for the possible predicted range for XAU/USD.
Technical indicators point towards the downside as XAU/USD has already broken below trendline support at $1207 and the metal has already tested $1193 support. The US dollar has a negative correlation with gold and with US stocks rallying, we clearly see why gold is headed towards the downside. All but one stock, the USX, should gauge the overall performance of the USD relative to other currencies. See charts below article
Gold has been in an uptrend posting a 30 day high of $1220 with higher lows now trading at 1198 whilst the USX erased its former gains from 100.59 and now trading at 99.85 with lower highs. This may leave analysts puzzled as the USX and gold are oil and water as one rises one should fall this now takes traders to question what's to happen next.
Return Of The Greenback?
I believe we would be too hasty by answering that question but we do know that the USD is infamous for rebounds and with US GDP figure consensus at 2.1 from a previous 3.5 reading may be bad for the USD but it would be too soon to tell as the actual figure is what matters and a revised figure may also create spikes in the market. A high reading is bullish for the USD while a low reading is bearish.
Technical Indicators:
XAU/USD has broken below $1207 trendline support and trading at 1198. Minor resistance can be seen at $1203 and a break above $1208 sets the pair resuming it’s uptrend with bulls looking for a break above $1218 strong resistance for further upside. The alternative scenario if XAU/USD breaks below 1193 support paves room for further downside which defies the 4hr stochastic.
The dollar has made a recovery from the Japanese yen from 113.15, now trading at 113.4, as yen and gold move in one direction. However, it seems that it may prove to be a pump and dump sell on rally for USD/JPY. Overall USD/JPY is in favor of the downside and should gold trade above $1208, the correlation will be evident. See original post for gallery.
Targets
Bulls:
1207 R1
1218 R2
1228 R3
Bears:
1193 S1
1188 S2
1162 S3
Over the last 30 minutes (03:30 GMT) gold is down 1.57% to the USD
Winners and Losers – Majors
GBP/USD 1.01%
USD/JPY 0.05%
USD/CHF -0.11%
EUR/USD 0.05%