Gold has maintained its bullish bias as the deadly coronavirus dominates the headlines. Forex traders are looking forward to January's economic reports to get a clearer picture of disruptions caused to the supply chain. Gold is now trading just above its horizontal support area, will bulls get enough data to push this precious metals to a fresh 2020 high, or are bears ready to force a sell-off? Subscribe to the PaxForex Daily Fundamental Analysis and grow your balance trade-by-trade.
The RBNZ left interest rates unchanged, noting that the economy can deal with the virus. Japanese machine tool orders plunged yet again, and Eurozone industrial production posted a bigger-than-expected contraction. The global economy was slowing down before the outbreak of the virus and is now faced with additional stress. Will Gold bulls take advantage of the conditions? Where will bears attempt to reverse gains? Today’s fundamental analysis will take a look at the upside potential as well as the downside risk in this currency pair.
Here are the key factors to keep in mind today for Gold trades:
- New Zealand Credit Card Spending: New Zealand Credit Card Spending for January decreased by 0.1% monthly and increased by 4.2% annualized. Forex traders can compare this to New Zealand Credit Card Spending for December, which decreased by 0.9% monthly, and which increased by 3.9% annualized.
- Japanese Money Stock M2+CD and Japanese Money Stock M3: Japanese Money Stock M2+CD for January increased by 2.8% annualized and Japanese Money Stock M3 increased by 2.3% annualized. Economists predicted an increase of 2.7% and 2.3%. Forex traders can compare this to Japanese Money Stock M2+CD for December, which increased by 2.7% annualized and to Japanese Money Stock M3, which increased by 2.3% annualized.
- Reserve Bank of New Zealand Interest Rate Announcement: The Reserve Bank of New Zealand kept interest rates unchanged at 1.00%. Economists predicted no change in interest rates. Forex traders can compare this to Reserve Bank of New Zealand's previous interest rate announcement were rates were left unchanged at 1.00%.
- Japanese Machine Tool Orders: Japanese Preliminary Machine Tool Orders for January decreased by 35.6% annualized. Forex traders can compare this to Japanese Machine Tool Orders for December, which decreased by 33.5% annualized.
- Eurozone Industrial Production: Eurozone Industrial Production for December decreased by 2.1% monthly and 4.1% annualized. Economists predicted a decrease of 1.7% monthly and1.9% annualized. Forex traders can compare this to Eurozone Industrial Production for November, which increased by 0.2% monthly, and which decreased by 1.7% annualized.
- US Monthly Budget Statement: The US Monthly Budget Statement for January is predicted at $6.2B. Forex traders can compare this to the US Monthly Budget Statement for December, which was reported at -$13.3B.
Should price action for Gold remain inside the or breakout above the 1,552.00 to 1,579.30 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1,567.00
- Take Profit Zone: 1,683.20 – 1,696.40
- Stop Loss Level: 1,552.00
Should price action for Gold breakdown below 1,552.00 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1,546.00
- Take Profit Zone: 1,502.50 – 1,519.20
- Stop Loss Level: 1,552.00
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