The gold market is oversold, as bulls can seize the initiative

Yesterday, gold showed restrained growth. Price of yellow metal received support at $1268 and gained to the area of ​​$1278, the market closed at $1275, after a slight pullback. Today, amid the resumption of the growth of the US dollar, the gold market is trading under some pressure. However, as a result of yesterday's trading, we can draw some conclusion. For five weeks, bears failed to push the gold market below the level of 1267-1269. Thus, this level acts as a steady support preventing further decline. The nearest tactical resistance is located at the level of $1275-$1280 - the 100th moving average passes here, which was pierced by the market from top to bottom just five days ago.

The current week will be rich in news, and while the entire global market is trading restrained, waiting for key events that will appear later this week. Three key events can significantly affect the alignment of forces in the precious metals market and set a strong direction for the market. The first of these events is a two-day meeting of the FOMC, which will conclude tomorrow night. An increase in the rate on it is not expected, exactly, as well as any official comments. However, some officials may not be able to resist personal comments.Directly with the prospect of raising interest rates in the US, the attention of market participants will be focused on the nomination of a new head of the Fed, whose name Donald Trump should announce this week.

Finally, at the end of the week we are waiting for Nonfarm Payrolls, one of the two main indicators that the US Federal Reserve is guided by when making decisions on changing rates and adjusting its monetary policy. These data may make it clear that the US economy is ready for another rate hike this year. As you can see, the current trading week is quite saturated with important macroeconomic news, which can have a very strong impact on the market, so in the current situation, investors preferred to take a wait-and-see position. This is the reason for the weak dynamics of the market in recent trading days. In general, the market is at a point of uncertainty. However chances for gold rise in our opinion prevail. The gold market is oversold and has the right to expect a good correction to the downward movement. The price is trying to push up, but so far it has not even reached the nearest local resistance at 1280. Only after the breakdown of this level is possible the acceleration of price movement and further price growth towards the mark of 1300.00.

Trading recommendations - cautious longs at levels of $1264-$1270 and when depositing above $1280

Fort Financial Services