The Trump-Xi summit produced a temporary tariff truce which provided a short-term boost to sentiment, but for forex traders it is back to business as usual. The Bank of Japan injected more liquidity into the market and the Reserve Bank of Australia cut interest rates by 25 basis points to 1.00%. The Australian Dollar advanced slightly, helped by a rise in consumer sentiment. Gold prices ended their correction after dipping below $1,400, where a new support level is forming. Will bulls be able to charge once again or will bears get encouraging economic data and extend the price action reversal? Today’s fundamental analysis will cover both sides of the equation.
Gold prices surged last month to multi-year highs after tensions between the US and Iran flared up. As geopolitical risks remain elevated, price action remains well supported. The announced truce between the US and China will do little to stop the slowing global economy which is headed towards a recessions. This will further apply upside pressure on Gold prices. Economic data remains weak with global PMI figures sliding below the 50.0 mark, indicating contraction in their respective sectors. Is now the time to buy into Gold? Forex trading is impacted by this precious metal as commodity exporting countries are heavily exposed and forex traders also use Gold to hedge their portfolios.
Here are the key factors to keep in mind today for Gold trades:
- New Zealand Building Permits: New Zealand Building Permits for May increased by 13.2% monthly. Forex traders can compare this to New Zealand Building Permits for April which decreased by 8.0% monthly.
- Australian ANZ Roy Morgan Weekly Consumer Confidence Index: The Australian ANZ Roy Morgan Weekly Consumer Confidence Index for the week of June 30th was reported at 118.9. Forex traders can compare this to the Australian ANZ Roy Morgan Weekly Consumer Confidence Index for the week of June 23rd which was reported at 114.3.
- Japanese Monetary Base and Monetary Base end of Period: The Japanese Monetary Base for June increased by 4.0% annualized and the Monetary Base end of Period was reported at ¥523.2T. Economists predicted a figure of 3.4% and of ¥514.9T. Forex traders can compare this to the Japanese Monetary Base for May which increased by 3.6% annualized and to the Monetary Base end of Period which was reported at ¥511.8T.
- Australian RBA Interest Rate Decision: The Australian RBA cut interest rates by 25 basis points to 1.00%. Economists predicted interest rates at 1.00%. Forex traders can compare this to the previous Australian RBA Interest Rate Decision where interest rates were left unchanged at 1.25%.
- UK Nationwide House Prices: UK Nationwide House Prices for June are predicted to increase by 0.2% monthly and by 0.5% annualized. Forex traders can compare this to UK Nationwide House Prices for May which decreased by 0.2% monthly and which increased by 0.6% annualized.
- German Retail Sales: German Retail Sales for May are predicted to increase by 0.5% monthly and by 2.7% annualized. Forex traders can compare this to German Retail Sales for April which decreased by 2.0% monthly and which increased by 4.0% annualized.
- UK Markit/CIPS Construction PMI: The UK Markit/CIPS Construction PMI for June is predicted at 49.2. Forex traders can compare this to the UK Markit/CIPS Construction PMI for May which was reported at 48.6.
- Eurozone PPI: The Eurozone PPI for May is predicted to increase by 0.1% monthly by 1.8% annualized. Forex traders can compare this to the Eurozone PPI for April which decreased by 0.3% monthly and which increased by 2.6% annualized.
- Canadian RBC Manufacturing PMI: The Canadian RBC Manufacturing PMI for June is predicted at 49.0. Forex traders can compare this to the Canadian RBC Manufacturing PMI for May which was reported at 49.1.
Should price action for Gold remain inside the or breakout above the 1,381.60 to 1,397.50 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1,391.60
- Take Profit Zone: 1,439.00 – 1,475.70
- Stop Loss Level: 1,374.95
Should price action for Gold breakdown below 1,381.60 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1,370.00
- Take Profit Zone: 1,319.65 – 1,332.75
- Stop Loss Level: 1,381.60
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