Gold Price At Risk as Crude Oil Waits for Canadian GDP Data

Gold Price At Risk as Crude Oil Waits for Canadian GDP Data

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Jerome Powell, Federal reserve chairman has promised to offer support towards the economy of the USA

For the longest time possible. The conditions on the recent market will as well help the price of gold rise. This happens when the gold price has risen to $ 1786.

Well, 2020 has been a very good year because the price of gold has been increasing every month. This might be the case even in July. However, in may the price lowered pushing the RSI (Relative Strength Index) to overbought region.

Report

In 2020, there have been fresh yearly highs in the gold price in each month, and this might persist in July as well. However, this bullish behavior was not the case in May as the price was low ($1670) pushing the RSI to overbought territory. A clear indication that the gold price is struggling.

The high ($ 1796) that was seen in the year 2012, has now returned in the radar due to the highs in the month of may ($1765)and this might persist if the minutes from FOMC (Federal Open Market Committee) will influence the gold near-term outlook. Powell tells USA lawmakers that this happens soon than what they expected.

Congress stated that the Federal Open Market Committee is showing its commitment by applying its tools for supporting the economy as well as giving an assurance that there will be a fast recovery from this difficult moment. However, the central bank seems to be in no hurry to apply conventional tools. But in another statement, Powell stated that the tools been used by the Federal Reserve should be used only during times of emergency.

It is for that reason Powell insisted that when the financial and economic conditions will improve, the tools will be returned in the toolbox. As a result, FOMC is trying to retain the recent policy during the decision making of the next interest rates that will be held on July 29th, however, the Federal officials are showing very little interest in the yield curve control program.

USA Non-farm payrolls report updates might as well encourage federal Open Market to the committee to conduct the wait-and-see method because there is an expectation of extra 3 million jobs in July.

In addition to this, the current contraction in the balance sheet of the Federal Reserve may not exist in a long duration because the liquidity swaps decline has led to its reduction.

Gold Price Daily Chart

Gold-Prices-at-Risk

  1. The 2020 opening range provides a constructive outlook on the gold price. The yearly high in 2019 was ($1557) while the RSI pushed into the overbought region during a similar period.
  2. The same scenario happened in February, the gold price marked its monthly low ($1548) in the first week, while the Relative Strength Index rose above the bearish formation at the beginning of this year and pushed back to overbought territory.
  3. March opening range was not impressed despite the volatility pickup, due to the decrease of monthly high ($1704), it led to a January low ($1517)break out.
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