The fundamentals currently influencing gold prices remain solidly bullish. The two primary factors are the extremely dovish monetary policy recently adopted by the Federal Reserve and other global Central Banks, and the unresolved trade war between the United States and China.
Accommodative monetary policy is a strong and bearish influence on the U.S. dollar. Since gold is paired against the U.S. dollar, a weaker dollar results in higher gold prices. Although the dollar index was higher today , it was weaker last week in response to a looser monetary policy.
The current trade war is absolutely having an impact on the global economy. Recent data clearly illustrates a contraction in global economic growth which is fueling the upcoming actions of global Central Banks as well as the Federal Reserve. It is these factors that will continue to be highly supportive of gold pricing.
Bullish technical studies
indicate that the first level of resistance in gold futures can be found at $1424. This is based upon the upper level resistance trendline. Major resistance is currently pegged at $1442 which is the highest trading point gold has achieved this year. There is solid support on a technical basis for gold at $1402 per ounce. This is based upon the most recent low which occurred on July 11th when gold traded to that price point.
Technical studies (bearish scenario)Â
Fundamental is supporting the bull for Gold as it consolidating.Â This consolidation has created a rare "DIAMOND" formation commonly referred as a Bearish formation as it occur after a rally.
As the range compresses it is believed that energy builds, and when it breaks it releases that stored up energy. Although fundamental are on the Bull, it is good to prepare for an surprise that could lead gold price to break to the lower side.Â