Gold loses strength due to dollar growth

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If we look at the stock market and the main US indices, we can see how, during the last sessions, it seems that currently the market is ready to buy the version of the Federal Reserve in relation to inflation. For now, this situation seems a bit fleeting, although as we saw in the press conference on June 17 by Jerome Powell, if the economic recovery continues at the current pace, the Fed would be willing to assess the possibility of starting to decline in the coming meetings . However, the market consensus does not expect any announcement or reaction until after the annual symposium in Jackson Hole next August.

Last week, in our analysis of commodities, we commented that, after such words, the rumors grew in relation to a possible decline, with gold being the big loser, after the strong rebound of the dollar before the possible change in the current monetary policy. .

This strength of the dollar jeopardized the upward structure, which was followed by gold, after confirming the formation of a triple terrain in the red at the end of last March. Here began a new upward momentum that caused it to break the bearish channel it had followed since its historical highs. If we look at the daily chart, we can see how, during yesterday’s session, gold lost its main support level in the overlapping zone of its 61.8% -fibonacci retracement level and the red band.

This leak is confirmed during today’s session and is pushing gold to trade around $ 1,750 per ounce. After the failure in the rebound over the past week, there has been a downward crossover of its moving averages of 18 and 200 sessions, thus confirming the bearish pause of this support level while the MACD continues to gather strength in negative territory despite the oversold that we can observe in the stochastic indicator.

In the coming sessions, we will have to look at a possible price pullback and see if it is able to recover and maintain the lost support levels, as a failure in this attempt could open the doors to further correction to its next level of support at the annual lows. .

mceu 90501506121625056832994Source: Admiral Markets MetaTrader 5. Gold’s daily letter. Data range: 2 March 2020 to 30 June 2021. Prepared on 30 June 2021 at 12:30 pm CEST. Please note that past returns do not guarantee future returns.

Evolution in the last 5 years:

  • 2020: 21.86%
  • 2019: 15.45%
  • 2018: -3.22%
  • 2017: 12.75%
  • 2016: 10.12%

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