Gold and the raising Dollar!

Secrets of the H4 chart

By: Ahura Chalki

Market analyst – IFC Markets

To understand the Gold market, we have many items to search for; however, sometimes Gold has different reactions to the same factors. 

Yesterday while the US dollar was getting stronger, which usually means the weaker Gold, it was vice-versa, and we saw the Gold reach above its first resistance of today (1,778), which was the second resistance of yesterday. The same reasons that are supporting the USD, supporting the Gold as well. Safe-Haven demand ahead of higher expected inflation, especially after raising of house price index and average income, with the faster spreading of Delta variant of Coronavirus, increasing the risk in the market, which will end by more demand for Safe-Havens, Gold, and USD at the same time. 

On the other hand, mixed US data confirming the FED comments that the economy still has a long way to reach the pre-pandemic level, and supports still will be there. More supports means more cash flow, and more cash in the market must be going somewhere. So where is better and lower risk than Stock and Gold markets, while the crypto market still was not much success to attract the investment institutes. 

This week, the essential data is still the US employment (NFP) numbers, as it has always played a vital role in the Federal Reserve monetary policies. This week, some Federal Reserve officials, in their speeches, said that inflation had made substantial progress, and the reduction of asset purchases will begin after “employment has also made substantial progress.” In addition, Fed Governor Waller also pointed out that “the reduction in debt purchases may start earlier than initially expected.” Mr. Kaplan, Dallas FED governor, also had more hawkish comments, saying he “wants to taper on bond purchases to start before the end of the year.”

Gold technical analysis

The current price at 1,777 is the first resistance above PP(1,766) and both main MA lines (20 and 50 Period), RSI moves above 50, and the price rises above the OBV trend line. As we can see in the below chart, the first resistance is the critical level at the H4 chart as well, and closing above this level can send the price much higher at second and third resistance, respectively at 1,785 and 1,800. On the flip side, breaching under 1,756 (S1) current overall downtrend can behold for a longer time. 

Gold technical analysis


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