Tuesday, 5 March 2019
Gold
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trading signals
Gold started the trading week with a decline of 0.75% having the background of the continuing strengthening of the dollar and the emerging positive news regarding the course of trade negotiations between Beijing and Washington. According to the Wall Street Journal, the parties have moved to the final stage of negotiations and can reach an agreement by the end of March. If the parties succeed in reaching an agreement, this could have very strong support for the stock market and a lot of pressure on safe assets such as gold and yen.
The strengthening of the dollar in recent days is mainly due to the weakening of other world currencies with the background of economic and political problems in certain regions. Yesterday, all G7 currencies finished trading against the dollar with decline, and by the end of the day, the index for the dollar was recorded at + 0.17%. A strong dollar makes the precious metal more expensive for investors, putting pressure on the demand.
Today, the focus of investors is statistics from China. In the published Caixin PMI services sector recorded a decline from 53.6 to 51.1 points, which indicates a slowdown in economic activity. The reaction of the stock market followed immediately, all major indices went down, giving support to gold.
Among other events that today can have a strong impact on the course of trading, it is worth highlighting the publication of data on PMI from the non-US manufacturing sector from ISM. Experts predict a growth, which can provide strong support for the dollar and increase the pressure on the yellow metal.
The graph now has an ambiguous situation. After breaking the support at 1303.00, the price continued to decline, denoting as a priority the scenario with the further development of the bearish wave. On the other hand, quotes have now reached a strong support area located between the levels of 1285.00-1288.00, and here a reversal signal can be formed. Therefore, from the current levels one can expect a local continuation of the downward movement, but the potential of the bearish wave will be very limited.
Resistance Levels: 1290.00, 1299.00, 1310.00;
Support levels: 1288.00, 1285.00, 1280.00.
The main scenario - a decline in the range of 1285.00-1288.00.
An alternative scenario - consolidation above 1290.00 and an increase to 1299.00.
Gold remains under pressure; there are no reversal signals on the chart. Therefore, within the day, we give preference to shorts, which can be sought after a corrective movement will take place, above the level of 1290.00.
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