Gold continues to advance after geopolitical tensions provided enough bullish momentum for a breakout. The latest escalations in the Persian Gulf have further attracted investors who seek safe haven assets. Iran escorted a foreign oil tanker back to its shores on allegations that it was smuggling oil and the US military shot down an Iranian drone in response. Tensions between both countries are expected to escalate as the US seeks allies to pressure Iran over its foreign policy. How much more upside potential is in gold? Subscribe to the PaxForex Daily Fundamental Analysis and take the profitable side of this trade!
Another bullish driver for gold is the global central bank dominance in favor of easy monetary policy. With the US Fed expected to cut interest rates, gold is expected to rally further as it is priced in US Dollars; bot enjoy an inverse relationship which means that if one asset advances the other contracts. Economic data across the globe continues to come in mixed with a bearish bias. Will bulls continue to stampede higher from current levels or will bears get an excuse to take some profits? Today’s fundamental analysis covers both directions.
Here are the key factors to keep in mind today for Gold trades:
- Japanese National CPI: The Japanese National CPI for June increased by 0.7% annualized. Economists predicted an increase of 0.7% annualized. Forex traders can compare this to the Japanese National CPI for May which increased by 0.7% annualized. The Japanese National Core CPI for June increased by 0.5% annualized. Economists predicted an increase of 0.5% annualized. Forex traders can compare this to the Japanese National Core CPI for May which increased by 0.5% annualized. The Japanese National CPI Excluding Fresh Food for June increased by 0.6% annualized. Economists predicted an increase of 0.6% annualized. Forex traders can compare this to the Japanese National CPI Excluding Fresh Food for May which increased by 0.8% annualized.
- Japanese Buying Foreign Bonds and Japanese Buying Foreign Stocks/Foreign Buying Japanese Bonds and Foreigners Buying Japanese Stocks: Japanese Buying Foreign Bonds for the period ending July 12th was reported at ¥950.0B and Japanese Buying Foreign Stocks was reported at -¥18.6B. Forex traders can compare this to Japanese Buying Foreign Bonds for the period ending July 5th which was reported at ¥297.0B and to Japanese Buying Foreign Stocks which was reported at ¥38.7B. Foreign Buying Japanese Bonds for the period ending July 12th was reported at ¥844.3B and Foreigners Buying Japanese Stocks was reported at -¥93.1B. Forex traders can compare this to Foreign Buying Japanese Bonds for the period ending July 5th which was reported at ¥470.6B and to Foreigners Buying Japanese Stocks which was reported at ¥192.2B.
- Japanese All Industry Activity Index: The Japanese All Industry Activity Index for May increased by 0.3% monthly. Economists predicted an increase of 0.3% monthly. Forex traders can compare this to the Japanese All Industry Activity Index for April which increased by 0.8% monthly.
- German PPI: The German PPI for June is predicted to decrease by 0.1% monthly and to increase by 1.5% annualized. Forex traders can compare this to the German PPI for May which decreased by 0.1% monthly and which increased by 1.9% annualized.
- Eurozone Current Account: The Eurozone Current Account (s.a.) for May is predicted at €21.2B. Forex traders can compare this to the Eurozone Current Account (s.a.) for April which was reported at €20.9B.
- UK Public Sector Net Borrowing: UK Public Sector Net Borrowing for June is predicted at £3.3B and UK Public Sector Net Borrowing excluding Banking Groups at £3.9B. Forex traders can compare this to UK Public Sector Net Borrowing for May which was reported at £4.5B and to UK Public Sector Net Borrowing excluding Banking Groups which was reported at £5.1B.
- Canadian Retail Sales: Canadian Retail Sales for May are predicted to increase by 0.3% monthly and Canadian Retail Sales Less Autos are predicted to increase by 0.4% monthly. Forex traders can compare this to Canadian Retail Sales for April which increased by 0.1% monthly and to Canadian Retail Sales Less Auto which increased by 0.1% monthly.
- US Michigan Consumer Sentiment: Preliminary US Michigan Consumer Sentiment for July is predicted at 98.8. Forex traders can compare this to US Michigan Consumer Confidence for June which was reported at 98.2. Preliminary Current Conditions for July are expected at 112.8 and Preliminary Expectations are predicted at 90.0. Forex traders can compare this to Current Conditions for June which were reported at 111.9 and to Expectations which were reported at 89.3.
Should price action for Gold remain inside the or breakout above the 1,439.00 to 1,462.35 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1,448.00
- Take Profit Zone: 1,576.45 – 1,616.50
- Stop Loss Level: 1,431.00
Should price action for Gold breakdown below 1,439.00 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1,421.50
- Take Profit Zone: 1,381.60 – 1,400.00
- Stop Loss Level: 1,431.00
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