As geopolitical tension increase and as the trade war the US started with China is turning into a tech war, Gold is attracting bids as forex traders seek safe have from the turmoil in financial markets. Economic data released around the world is also showing a steeper than expected slowdown which has increased recession fears. A growing number of calls for the global economy to contract have emerged with some analysts pointing out that a recession could materialize in as little as three quarters. Despite the increase in overall risk, online forex trading has remained a sector of the financial system which continues to attract new entrants.
Today’s fundamental analysis will take at look at Gold and what could further impact price action in this precious metal. The Reserve Bank of Australia decided to cut its benchmark interest rate by 25 basis points to 1.25%, but the Australian Dollar followed Gold prices to the upside. New Zealand reported better-than-expected trade data while UK BRC Like-for-Like Sales posted an unexpected contraction. Australian retail sales contracted as consumer confidence eased, but trade data remained stable and forex traders now eye Eurozone CPI data as well as US factory orders as well as a final reading on durable good orders. How will this impact price action? Will it motivate bulls to push Gold through resistance levels or will bears step in and initiate a reversal on the back of profit taking?
Here are the key factors to keep in mind today for Gold trades:
- New Zealand Terms of Trade Index: The New Zealand Terms of Trade Index for the first-quarter increased by 1.0% quarterly. Economists predicted an increase of 0.5% quarterly. Forex traders can compare this to the New Zealand Terms of Trade Index for the fourth-quarter which decreased by 3.0% quarterly.
- UK BRC Like-for-Like Sales: UK BRC Like-for-Like Sales for May decreased by 3.0% annualized. Economists predicted an increase of 0.8% annualized. Forex traders can compare this to UK BRC Like-for-Like Sales for April which increased by 3.7% annualized.
- Australian ANZ Roy Morgan Weekly Consumer Confidence Index: The Australian ANZ Roy Morgan Weekly Consumer Confidence Index for the week of June 2nd was reported at 116.9. Forex traders can compare this to the Australian ANZ Roy Morgan Weekly Consumer Confidence Index for the week of May 26th which was reported at 118.6.
- Japanese Monetary Base and Monetary Base end of Period: The Japanese Monetary Base for May increased by 3.6% annualized and the Monetary Base end of Period was reported at ¥511.8T. Forex traders can compare this to the Japanese Monetary Base for April which increased by 3.1% annualized and to the Monetary Base end of Period which was reported at ¥514.6T.
- Australian Current Account Balance: The Australian Current Account Balance for the first-quarter was reported at -A$2.9B. Economists predicted a figure of -A$2.9B. Forex traders can compare this to the Australian Current Account Balance for the fourth-quarter which was reported at -A$6.3B. Australian Net Exports of GDP for the first-quarter increased by 0.2% quarterly. Economists predicted an increase of 0.2% quarterly. Forex traders can compare this to Australian Net Exports of GDP for the fourth-quarter which increased by 0.2% quarterly.
- Australian Retail Sales: Australian Retail Sales for April decreased by 0.1% monthly. Economists predicted an increase of 0.2% monthly. Forex traders can compare this to Australian Retail Sales for March which increased by 0.3% monthly.
- Australian RBA Interest Rate Decision: The Australian RBA cut interest rates by 25 basis points to 1.25%. Economists predicted an interest rates cut to 1.25%. Forex traders can compare this to the previous Australian RBA Interest Rate Decision where interest rates were left unchanged at 1.50%.
- UK Markit/CIPS Construction PMI: The UK Markit/CIPS Construction PMI for May is predicted at 50.6. Forex traders can compare this to the UK Markit/CIPS Construction PMI for April which was reported at 50.5.
- Eurozone Unemployment Rate: The Eurozone Unemployment Rate for April is predicted at 7.7%. Forex traders can compare this to the Eurozone Unemployment Rate for March which was reported at 7.7%.
- Eurozone CPI and Eurozone Core CPI: The Eurozone CPI for May is predicted to increase by 1.3% annualized and the Eurozone Core CPI is predicted to increase by 0.9% annualized. Forex traders can compare this to the Eurozone CPI for April which increased by 1.7% annualized and to the Eurozone Core CPI which increased by 1.3% annualized.
- US Factory Orders: US Factory Orders for April are predicted to decrease by 0.9% monthly. Forex traders can compare this to US Factory Orders for March which increased by 1.9% monthly.
Should price action for Gold remain inside the or breakout above the 1,321.40 to 1,327.70 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1,324.40
- Take Profit Zone: 1,355.40 – 1,364.90
- Stop Loss Level: 1,310.50
Should price action for Gold breakdown below 1,321.40 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1,315.00
- Take Profit Zone: 1,290.00 – 1,298.50
- Stop Loss Level: 1,321.40
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