News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bearish
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • Entry orders are a valuable tool in forex trading. Traders can strategize to come up with a great trading plan, but if they can’t execute that plan effectively, all their hard work might as well be thrown out. Learn how to place entry orders here: https://t.co/lAFyv1gM0P https://t.co/zSCf8azESa
  • *Reminder: Weekly Strategy Webinar tomorrow morning at 8:30am ET on DailyFX! https://t.co/lxd5fZnn4H
  • Central banks often deem it necessary to intervene in the foreign exchange market to protect the value of their national currency. Learn how central bank intervention can impact your trading here: https://t.co/ZJOEtpGUIq https://t.co/tJWOXZCoBw
  • The US Dollar may seesaw as investors navigate what could be a volatile week packed with US GDP data, rising Covid-19 cases, Q3 corporate earnings and more. Get your #currencies update from @ZabelinDimitri here: https://t.co/UNRcd3c9uA https://t.co/BiUiOV4cXC
  • USD/MXN pushes lower towards a critical support level in the midst of continued political uncertainty. Get your #currencies update from @HathornSabin here: https://t.co/HEAzgJJJjg https://t.co/NU9wYbIuni
  • Gold Forecast - via @DailyFX “Gold price outlook still hinges on stimulus deal expectations and corresponding swings in real yields.” What will I have my eyes on in the week ahead? Link to Analysis: https://www.dailyfx.com/forex/fundamental/forecast/weekly/title/2020/10/23/gold-forecast-xau-usd-at-the-mercy-of-a-fiscal-stimulus-deal.html $GC_F $XAUUSD $GLD https://t.co/GWEI4d4mMu
  • Forex liquidity makes it easy for traders to sell and buy currencies without delay, and also creates tight spreads for favorable quotes. Low costs and large scope to various markets make it the most frequently traded market in the world. Learn more here: https://t.co/5uSWKoLkd6 https://t.co/rxswe1gVL0
  • Talks between the EU and UK restarted today and will continue over the weekend as negotiators from both sides battle against the clock. Get your #currencies update from @nickcawley1 here: https://t.co/ER8IT1yxYO https://t.co/Jeeu2P9mwB
  • The London trading session accounts for around 35% of total average forex turnover*, the largest amount relative to its peers. The London forex session overlaps with the New York session. Learn about trading the London forex session here: https://t.co/UTWxbnNz7M https://t.co/W9awqb818J
  • There is a great debate about which type of analysis is better for a trader. Is it better to be a fundamental trader or a technical trader? Find out here: https://t.co/aVAzFypAg1 https://t.co/lucvsACxu5
Gold Price Forecast: RSI Foreshadows Change in Behavior

Gold Price Forecast: RSI Foreshadows Change in Behavior

2019-12-18 06:00:00
David Song, Strategist
Share:

Gold Price Talking Points

The price of gold trades in a very tight range even though the US and China agree on a trade deal, but recent developments in the Relative Strength Index (RSI) foreshadows a potential change in market behavior as the oscillator breaks out of the bearish formation from earlier this year.

Gold Price Forecast: RSI Foreshadows Change in Behavior

The price of gold is little changed after the Office of the United States Trade Representative (USTR) revealed that the Trump administration “will be maintaining 25 percent tariffs on approximately $250 billion of Chinese imports, along with 7.5 percent tariffs on approximately $120 billion of Chinese imports.”

The lack of detail surrounding the Phase One trade deal may keep gold prices in a narrow range as China Foreign Ministry Spokesperson Geng Shuang states that the “two sides still need to go through necessary procedures including legal reviewing and translation proofreading” before signing the agreement.

Nevertheless, easing tensions between the US and China may encourage the Federal Reserve to retain a wait-and-see approach at the next interest rate decision on January 29 as Chairman Jerome Powell and Co. insist that the “economic outlook remains a favorable one despite global developments and ongoing risks.”

In fact, the update to the Summary of Economic Projections (SEP) indicates the Federal Open Market Committee (FOMC) will stick to the sidelines for the foreseeable future as the dot-plot shows the benchmark interest rate sitting in its current threshold of 1.50% to 1.75% throughout 2020.

However, the FOMC may reestablish its rate easing cycle as US President Donald Trump tweets that it “would be sooo great if the Fed would further lower interest rates,” and the central bank could be forced to alter the forward guidance as the administration initiatesa process to assess increasing the tariff rates and subjecting additional EU products to the tariffs.”

Image of Fed Fund futures

The ongoing shift in US trade policy may push the FOMC to further insulate the economy in 2020, with Fed Fund futures reflecting budding expectations for a June rate cutas Chairman Powell warns that “if developments emerge that cause a material reassessment of our outlook, we would respond accordingly.”

In turn, Fed officials may change their tune over the coming months, and speculation for lower interest rates along with the weakening outlook for global growth may keep gold prices afloat as market participants look for an alternative to fiat-currencies.

Moreover, the reaction to the former-resistance zone around $1447 (38.2% expansion) to $1457 (100% expansion) helps to rule out the threat of a Head-and-Shoulders formation as the region appears to be acting as support.

Sign up and join DailyFX Currency Strategist David Song LIVE for an opportunity to discuss potential trade setups.

Gold Price Daily Chart

Image of gold price daily chart

Source: Trading View

  • Keep in mind, the broader outlook for gold prices remain constructive as both price and the Relative Strength Index (RSI) clear the bearish trends from earlier this year, with the precious metal trading to a fresh yearly-high ($1557) in September.
  • At the same time, the reaction to the Fibonacci overlap around $1447 (38.2% expansion) to $1457 (100% expansion) helps to rule out the threat of a Head-and-Shoulders formation as the former-resistance zone appears to be acting as support.
  • Recent developments in the RSI foreshadows a potential change in market behavior as the oscillator breaks out of the bearish formation from earlier this year.
  • However, gold appears to be stuck in the November range, with a move above $1489 (23.6% retracement) bringing last month’s high ($1516) on the radar.
  • Need a break/close above the $1509 (61.8% retracement) to $1517 (78.6% expansion) region to bring the topside targets on the radar, with the first hurdle coming in around $1554 (100% expansion), which largely lines up with the yearly-high ($1557).

For more in-depth analysis, check out the 4Q 2019 Forecast for Gold

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES