Thursday, August 1, 2019

GOLD - 01 August 2019


Fundamental Highlights

The Federal Reserve cut rates by 25 basis points today in what Powell called a ‘mid-cycle adjustment’ and as a result, gold prices have dropped by more than 1% on the decision. In addition to cutting because of a global slowdown and a desire to re-centre inflation expectations, Powell has said that yesterday's cut was an insurance cut to ensure against downside risks in trade. Powell also feels there are signs of weak investment and manufacturing as a result of such risks already. The statement between the June 19 and the July 31 are pretty much identical hence we can expect a stronger Dollar for longer unless the evolution of trade uncertainty, low inflation, global growth and the domestic economy deteriorate. However, gold should find support on global uncertain regardless.

Technical Analysis

Gold prices dropped by more than 1% to print a low of 1408.95 per ounce after loosing traction on the momentum during yesterday’s session. The price has found support by the 1410.78 level and is currently taking the bids just below the 1415 level. Now that the lower band has been broken to the downside, we should expect the price to edge lower and particularly towards the 1401.62 support level. However, traders should take precautions in case this break out is a false one.

Support: 1410.78 / 1401.62
Resistance: 1435.81 / 1441.79

Chart (H4)