Gold is Waiting for a Proper Reason to Grow

Gold has a chance to grow as long as the USD is weak. This driver is the one that works best for the precious metal recently: when the US Dollar get under pressure, Gold prices rise.

This time, investors are very cautious. Gold isn’t skyrocketing as fast as the USD plummeted last Friday. This probably means that global market players believe that the current fluctuations in the main currency pair are temporary. That’s why the precious metal hasn’t reached 1300 yet while the USD is being quite weak.

One of the deterrents to Gold prices is the monetary policy of the US Federal Reserve. The December meeting of the regulator is ahead and investor are expecting the Fed to raise the key rate. Gold, unlike the US bonds, doesn’t bring fixed profit, so it has no advantages of other assets under such conditions.

However, there is a “counterweight”. Global central banks continue buying Gold for their reserves. In this respect, one should pay attention to what the Bank of Russia is doing: last Friday, the regulator announced that it was going to continue increasing the share of Gold in its reserves. Such policy is in the area of interest of Vladimir Putin’s executive office, this is why it’s so important for the Russian Central Bank. One shouldn’t disregard the forthcoming presidential elections in the Russian Federation and everything in the country must traditionally be very smooth before them. The Central Bank will continue increasing its investments into Gold, thus providing the precious metal with a long-term support. Apart from the Russian regulator, Gold are also being bought by central banks of other developing countries.

From the technical point of view, the dominating trend is still bullish. After finishing the correction, the pair stopped at 1260.67 without reaching the support line. The main upside target may be the resistance line of the long-term rising channel. One of the significant targets may be the psychologically-crucial level at 1400.00.

The H4 chart of the instrument also shows the uptrend. The closest upside target is close to the resistance line of the current short-term channel at 1303.00. If the price breaks this level, it may stop for a while and test the broken level. The next upside target may be near the resistance line of the projected channel at 1328.00.

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Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex bears no responsibility for trading results based on trading recommendations described in these analytical reviews.