The precious metal gold is still consolidating in an asymmetric triangle pattern. It appears like investors are confused whether to stay bullish of a safe haven asset or to sell off on the stronger dollar.
Ongoing political tensions in the Eurozone is generating the safe haven demand as investors fear another Italian election. These are likely to take place as soon as August, might serve as a de facto election on the country’s membership in the European Union. A couple of days ago, I read somewhere that the Italian debt has reached 130% of its GDP. Which really is an alarming situation. Let’s see if the Italian government decides to stay in the EU or not. But in the meantime, safe haven assets can remain supported over boosted haven appeal.
Anyways, I’m excited about the economic calendar as it’s showing Prelim GDP and ADP employment change figures from the U.S. economy. Both of these are market moving catalysts and can drive nice fluctuations in the sideways gold. We already discussed these events and their potential outcomes in the May 30 Economic Events Report.
On the release of these events, we may see a violation of the $1,295 – $1,305 trading range. Honestly, the technical side of the market hasn’t changed much. I’m still focusing on the asymmetric triangle pattern of the 4- hour chart. The pattern is supporting the pair near $1,295 along with a resistance at $1,305.
Gold – XAU/USD – 4 Hour Chart
The only change is in the leading indicators. The RSI and Stochastics are likely to show us a bullish crossover (above 50) which is a bullish signal. But, we can’t say much until the news is released today. However, the violation of $1,305 can extend gold’s rally until $1,317. On the lower side, the violation of $1,295 can extend the bearish rally to $1,285.
Gold – XAU/USD – Trade Idea
It won’t be rational to open any call before the news today. However, if you really want to trade, it’s recommended to trade this range:
- Sell below $1,307
- Buy above $1,295
The FX Leaders Team will be updating fresh trading signals throughout the day. So, stay tuned and trade with care. Good luck.