After the comments from FED member Raphael Bostic on Wednesday where he stated that “he sees no “urgency” for the FED to move, or to raise rates high enough to actually restrict economic growth”, the US-Dollar not only took a hit, but Gold made another attempt to break above 1,300 USD/ounce. As one can see in the FED Watch Tool, market participants now see only a nearly 18% chance for one rate hike of the FED till December 2019.
With this bias in mind, all incoming data sets from the US, especially in terms of employment and inflation (as of today, 2:30pm CET), can be most likely interpreted in the following way: if data comes in below expectation, further losses in the USD seem likely, while Gold will most likely attack the region around 1,300 USD/ounce again.
Source: Economic Events 11 January 2019 – Admiral Markets’ Forex Calendar
But even if we currently find ourselves in a favourable seasonal environment for Gold (in fact, from Monday, 14 January till 5 February, Gold saw over the last 20 years, in 75% of the cases, an average gain of 30.61 USD/ounce, while in 5 years it lost on average 12.86 USD/ounce), lots of bad and dovish news has already been priced into the US-Dollar. That means that on the other hand, any dataset coming in as expected or above expectation could trigger a sharper decline in Gold. But from a technical side, Gold can be considered bullish, as long as we trade above 1,275/277 USD/ounce with a target of at least 1,308/310 USD/ounce on the upside:
Source: Admiral Markets MT5 with MT5SE Add-on Gold 4-Hour chart (between 04 November 2018 to 10 January 2019). Accessed: 10 January 2019 at 10:00 PM GMT – Please note: Past performance is not a reliable indicator of future results, or future performance – In 2014, the value of Gold fell by 1.7%, in 2015, it fell by 10.4%, in 2016 it increased by 8.1%, in 2017 it increased by 13.1%, in 2018, it fell by 1.6%, meaning that after five years, it was up by 6.4%.
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