Following the auction on Wednesday, the price of gold fell after the Fed's comments on further implementation plan ii monetary policy.
For most investors expected the regulator to maintain the level of the interest rate and the main parameters of its monetary policy unchanged, despite low inflation and verbal pressure on the Fed by the White House. Within the last at the end of the meeting a press conference the head of the Fed Jerome Powell noted that fully satisfied with the current level of interest rates and a wait which took control at the beginning of this year. Powell did not see the danger in the low rates of inflation, which had been previously, noting that lower prices may be temporary. So now the regulator sees no reason to change interest rates in one or the other side.
These statements led to a sharp strengthening of the dollar and, accordingly, reduce the quotations of gold, as some investors had expected from the regulator signals a possible decrease in interest rates in the medium term due to lower inflationary pressure.
Another factor of pressure on the yellow metal steel statements by the representatives of China and the United States at the end of the next round of trade negotiations. Both sides noted that they were able to reach a compromise on a number of important issues, including the abolition of the production mechanism previously imposed sanctions and mutual access to key markets, but there are still issues that the parties failed to agree. Now the negotiating teams are back for another round of talks, which will probably be finalized a draft agreement on the Chinese and English languages. It is obvious that the two sides are very close to signing a trade agreement that has the potential to be a very strong driver for growth in the global economy and stock markets, which will be extremely negative for gold, which is seen by investors as a defensive asset,
Today, the focus of investors will be the statistics of European PMI manufacturing sector, as well as the results of the meeting and the Bank of England's monetary policy comments. In the US, among the most important news is to provide data on industrial orders and the weekly report on initial claims for unemployment benefits.
After another failed attempt to overcome customer resistance at 1287.50 price resumed its downward movement, suppressing resistance at 1279.50, and is now coming to the key support level at 1270.00. Given the direction of movement of the medium-term trends in the probability of breakdown 1270.00 level is very high. If this level is broken, the next target would be to reduce the mark 1263.50.
Levels of resistance: 1277.00, 1287.50, 1294.00;
Support levels: 1270.00, 1263.50, 1260.00.
The main scenario - a correction to the area and decrease 1277.00 to 1263.50.
Alternative Scenario - consolidation below 1270.00 and practically recoilless decline to 1263.50 .
News background remains negative for gold. On the chart is dominated by the signals to support the further development of the downward movement. Therefore, preference is given to intra-day instrument sales, which should be considered on the level of 1277.00.
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Based on materials FortFS