Gold rises in price the fourth day, noting new highs today
Gold rises in price the fourth day in a row, noting today fresh highs on January 26 at $1357. Since the beginning of the week, the metal gained more of 2.85%, more than offsetting losses of the previous two weeks.
The current dynamics of metal fit into seasonal trends – gold traditionally rises in price before the New year according to the lunar calendar, and this year was no exception. Another issue is that the leading catalyst for the increased cost of metals since December of last year a bearish trend for the dollar, and the recent flight from risk in global stock markets did not help the metal as a protective asset.
Accordingly, assessing the prospects of gold, it is important to take into account the possible behavior of the American currency in the future. Yesterday’s inflation data provoked conversations about the four increases in the fed rate this year instead of three. However, signs of weakening consumer demand that became evident in the disappointing retail sales data tempered the speculation and sent the dollar into free fall.
Ahead of “American” a lot of new obstacles. Inflation may recede after the January growth, the budget deficit continues to swell, and the behavior of the President of trump is often accompanied by a “surprise effect”, which also interferes with the currency to gain ground.
In this aspect the yellow metal at this stage there is still potential for further growth. And if the retreat of the dollar will be further developed until the end of the month we can see the assault on fresh highs this year. Now this year’s maximum is at $1366, which in late January correction began, which ended a week ago.
In the short term quotes can go to a technical correction in terms of local overbought. The nearest support in this case is expected around $1340.