Gold is sold and Bond is bought

6月27日

Gold prices fell below the current average trading zone in the Asian session as the bias in the dollar and distrust of the metals ahead of inflation data may possibly affect interest rates. Industrial metals such as copper also posted losses due to weakening confidence with major importer China.

Spot gold currently opened the European session at $2,300 slightly above the decline seen in the Asian market which had futures at $2,309.55 per ounce before 12pm. Gold strength is pressuring the dollar ahead of PCE data later this afternoon, trade balance and non-military orders data, as well as US GDP and more importantly US unemployment data. The price of all metals will remain under pressure if the dollar continues to rise as it has this week reaching almost two-month highs. This boost in the dollar comes from a little anticipation of the PCE data as this is the Fed's favorite gauge of inflation and is the benchmark for its interest rate stance. The data is expected to show a cooling of inflation in the previous month, but above the 2% annual target. A high interest rate environment is not positive for gold and precious metals. And a radical change is not expected looking at the doctrine taken by Fed officials. This may reduce interest in gold and increase interest in the U.S. currency and sovereign debt.

If we look at the chart, currently the RSI is slightly oversold at 44.41%. The current range initiated in mid-April is still holding, we will see if these weeks there is a downward inflection point out of range towards the support area of 2,2010.88 or it will revert towards the average. It has formed a triple bell with three zones marked, the main zone near the checkpoint currently located at 2,330, the second below the current resistance, and would mark the 2,160 and the third around the 2,040. The current check point is the one that seems to carry the most strength, but if the trend during the summer remains unchanged it is possible that we will see a drop in metal prices in the coming weeks.

Ion Jauregui - ActivTrades Analyst




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