Gold has regained its bullish momentum as traders had a chance to digest the phase-one trade deal signed by the US and China last week. As doubts bout the commitments made in the deal have increased, risk-averse traders started to take advantage of the sell-off in this precious metal. Gold has now completed a breakout above its horizontal support area, but where will price action move to next? Today’s fundamental analysis will take a look at price action in both directions.
Economic data out of Japan showed a bigger than previously reported contraction in industrial production. The PBOC grabbed headlines this morning after it opted to keep interest rates unchanged. Economists predicted a five basis point reduction in the 1-Year Loan Prime Rate. Will bulls rally around gold as the global economy is slowing down faster than expected, or will bears attempt another breakdown? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Here are the key factors to keep in mind today for Gold trades:
- UK Rightmove House Prices: UK Rightmove House Prices for January increased by 2.3% monthly and by 2.7% annualized. Forex traders can compare this to UK Rightmove House Prices for December, which decreased by 0.9% monthly, and which increased by 0.8% annualized.
- Chinese 1-Year Loan Prime Rate and Chinese 5-Year Loan Prime Rate: The Chinese 1-Year Loan Prime Rate for January was reported at 4.15% and the Chinese 5-Year Loan Prime Rate was reported at 4.80%. Economists predicted a figure of 4.10% and 4.80%. Forex traders can compare this to the Chinese 1-Year Loan Prime Rate for December, which was reported at 4.15% and to the Chinese 5-Year Loan Prime Rate, which was reported at 4.80%.
- Japanese Industrial Production and Capacity Utilization: Final Japanese Industrial Production for November decreased by 1.0% monthly and by 8.2% annualized. Forex traders can compare this to previous Japanese Industrial Production for November, which decreased by 0.9% monthly and by 8.1% annualized. Capacity Utilization for November decreased by 0.3% monthly. Forex traders can compare this to Capacity Utilization for October, which decreased by 4.5% monthly.
- German PPI: The German PPI for December increased by 0.1% monthly, and decreased by 0.2% annualized. Economists predicted an increase of 0.1% monthly and a decrease of 0.3% annualized. Forex traders can compare this to the German PPI for November, which was reported flat at 0.0% monthly, and which decreased by 0.7% annualized.
- Japanese Convenience Store Sales: Japanese Convenience Store Sales for December decreased by 0.3% annualized. Forex traders can compare this to Japanese Convenience Store Sales for November, which increased by 1.0% annualized.
- Swiss Total Sight Deposits and Swiss Domestic Sight Deposits: Swiss Total Sight Deposits for the week of January 17th were reported at CHF585.9B and Swiss Domestic Sight Deposits were reported at CHF508.6B. Forex traders can compare this to Swiss Total Sight Deposits for the week of January 10th, which were reported at CHF584.5B and to Swiss Domestic Sight Deposits, which were reported at CHF504.3B.
Should price action for Gold remain inside the or breakout above the 1,552.00 to 1,565.40 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1,560.00
- Take Profit Zone: 1,610.00 – 1,619.85
- Stop Loss Level: 1,545.00
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 @ 1,545.00
- Take Profit Zone: 1,500.00 – 1,517.70
- Stop Loss Level: 1,560.00
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