After the price of gold reached a new 6-year high near 1557.00 last month, it subsequently declined amid a reduction in the threat of a “hard” Brexit and hopes for a trade agreement between the U.S. and China.
However, demand for gold remains both among global central banks and among private investors.
According to the World Gold Council (WGC), in August, world central banks increased their purchases of gold (+57.3 tons).
Thus, Central banks are trying to increase their stability in the face of strong volatility in the financial markets and geopolitical and foreign trade uncertainty.
A report on the U.S. labor market, published last Friday, does not indicate the likelihood of a recession in the United States. The number of jobs outside agriculture in September increased by 136,000, although economists had expected stronger growth (+145,000). At the same time, the U.S. unemployment rate fell to 3.5%, the lowest level since December 1969.
However, the Fed can go on to further soften policies to support the U.S. economy in the current turbulent financial markets.
“We must support the economy, not slow it down”, with the help of monetary policy, said Neil Kashkari, president of the Federal Reserve Bank of Minneapolis, last Monday.
Now, investors will carefully study the text of the minutes from the September meeting of the Fed, the publication of which is scheduled for Wednesday (18:00 GMT). Additional unexpected information contained in the protocols can also increase volatility in the financial markets.
Any signals from the Fed aimed at further easing monetary policy will cause a weakening dollar and an increase in gold quotes.
At the beginning of the European session on Tuesday, XAU / USD is trading above important support levels at 1498.00 (EMA200 on the 4-hour chart and on the 1-hour chart), 1485.00 (EMA50 on the daily chart and the Fibonacci level 50% of the correction to the decline wave from September 2011 and marks 1920.00).
A strong positive momentum prevails, and long positions are preferred above these support levels.
The breakdown of the local resistance level of 1557.00 will lead to further price growth in the direction of multi-year and absolute highs near the mark of 1920.00 dollars per ounce.
Support Levels: 1498.00, 1485.00, 1452.00, 1440.00, 1420.00, 1392.00, 1380.00, 1305.00, 1253.00
Resistance Levels: 1520.00, 1555.00, 1585.00
Sell Stop 1483.00. Stop-Loss 1513.00. Take-Profit 1452.00, 1440.00, 1420.00, 1392.00, 1380.00
Buy Stop 1513.00. Stop-Loss 1483.00. Take-Profit 1520.00, 1555.00, 1585.00, 1600.00