Gold Recovered After Plunging This SpringGold prices recovered early in the summer after plummeting in April and May. On Monday June 3rd, the instrument is trading at 1315.10 USD. We can see a slight correction, but there are enough reasons for a further growth.
Right now, the fundamental background is in favor of bulls. In general, there is only one reason for this, the trade conflict between the USA and China. To get things even more complicated, the USA decided to have trade wars on two fronts and hardened its relations with Mexico. Nobody denies that the USA are very aggressive and protect only their own interests. Investors don’t like it and try to avoid risks. At the same time, the demand for “safe haven” assets is going up. In this case, Gold stood to gain from this panic.
Obviously, trade wars between two global giants, Washington and Beijing, aren’t going to end today or tomorrow. Things are getting more serious and complicated as both parties are now placing restrictions on rare earth metals exports and laying charges of espionage. Probably, diplomatic means for agreeing on trade relations aren’t working anymore.
In this light, Gold has a potential to grow and may continue trading upwards for a while.
In the H4 chart, XAUUSD is trading below 1290.00. The instrument has reached its downside target at 1266.00; right now, it is forming a new correction. After breaking the correctional channel, the price may start another decline. From the technical point of view, this scenario is confirmed by Stochastic Oscillator; so far, its signal line indicates that the correction may yet continue, but may later be followed by the downtrend with the target at 1260.00.
The H1 chart shows the correction as well. Possibly, the pair may fall towards 1277.00. However, there is another scenario, according to which the correction may yet continue to reach 1290.00. After breaking the correctional channel, the price may resume the downtrend with the target at 1260.00. From the technical point of view, this scenario is confirmed by MACD Oscillator, as its signal line is reversing away from the “overbought area”. After breaking 1275.00, the downtrend may quicken.
By Dmitriy Gurkovskiy, Chief Analyst at RoboForex
Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.