Wednesday, October 11, 2017 7:47:23 AM
XAU/USD: Short Review & Forecast
The strong USD and the high probability of a rate hike this year put pressure on the GOLD. However, the geopolitical situation can change everything.
The situation on the market changed last month and the upward trend turned into a downward one. Until September the dollar had been under pressure due to geopolitical conflicts, the failure of Donald Trump's reforms and weak economic statistics. Consequently, a further increasing of the interest rate this year was doubtful for investors. All these negative factors followed one by one and put pressure on the dollar. Therefore, investors chose safer assets. This led to the Gold rising in price since the beginning of the year.
This week the dollar came under pressure again due to geopolitical risks because North Korea has announced new tests of ballistic missiles which are capable of reaching U.S. territory. However, the dollar has kept at a good level due to the strong economic statistics. The latest data on the labor market showed a decrease in the unemployment rate to 4.2% - the lowest level since 2001. In addition, the average hourly earnings have grown by 2.9%, which increases the probability of rising inflation. Therefore, a rate hike in the US in December is now expected by investors with a probability of 90%.
The resistance line of the trend is under the threat of moving up due to all of the geopolitical risks, but at the moment the most optimal course would be the short deals in the short-term, which is also confirmed by the MACD oscillator.
The strong USD and the high probability of a rate hike this year put pressure on the GOLD. However, the geopolitical situation can change everything.
The situation on the market changed last month and the upward trend turned into a downward one. Until September the dollar had been under pressure due to geopolitical conflicts, the failure of Donald Trump's reforms and weak economic statistics. Consequently, a further increasing of the interest rate this year was doubtful for investors. All these negative factors followed one by one and put pressure on the dollar. Therefore, investors chose safer assets. This led to the Gold rising in price since the beginning of the year.
This week the dollar came under pressure again due to geopolitical risks because North Korea has announced new tests of ballistic missiles which are capable of reaching U.S. territory. However, the dollar has kept at a good level due to the strong economic statistics. The latest data on the labor market showed a decrease in the unemployment rate to 4.2% - the lowest level since 2001. In addition, the average hourly earnings have grown by 2.9%, which increases the probability of rising inflation. Therefore, a rate hike in the US in December is now expected by investors with a probability of 90%.
The resistance line of the trend is under the threat of moving up due to all of the geopolitical risks, but at the moment the most optimal course would be the short deals in the short-term, which is also confirmed by the MACD oscillator.
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