Gold analysis – 21 Aug 2019

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By: Ahura Chalki

Two different scenarios!

Tomorrow and the day after, Friday are two very important days for the US economy with Jackson Hole symposium and Powell’s speech on Friday. The market is waiting for more rate cut from the US as well, as it happened in many other central banks along with more dovish strategies. In the last days Trump and his administration trying to increase the pressures on FED to cut the rates, they have even gone a step further and now talking about a 1% decrease. What we can understand from FED’s main members as well as Powell’s comments in different interviews, they do not agree with the government and trying to find a middle way for that. What middle way can mean exactly is probably to postpone the rate cut but to come out with changing in some strategies or to go with a maximum 25bp. Cutting the rate and following the government requests means deeper USD, as Trump is looking for that, which it means bullish for Gold and vice-versa. What makes economists a bit worried about a rate cut, is to start a new currency war with China and the EU and close the new opened windows to slow down the tensions.

From the technical side, Gold just returned under its 23.6% Fibonacci level, which is matched with EMA50 as well. 13 August, price broke the 38.2% Fibo. however after return could not pass the 100 level and fell back, which finally this week and on Monday could pass the 23.6% Finbo for the first time and earlier today for the second time, with this difference that this time, it is coincided with breaking the EMA50 as well. In the wider view, RSI and MACD also remain of bearish in the H4 chart.

 

Pivot point: 1503.93

Resistance levels: 1514.80 / 1519.40

Support levels: 1500.00 / 1488.00

The expected trading range for today is between 1488.00 support and 1514.80 resistance.


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