After the yuan devaluation, the USD spiked suddenly at yesterday's session. But the reality comes to the limelight in the form of a currency war and delay in the US interest rates hike. The metal extended the rally towards the crucial resistance level of $1,120.00 but was rejected.
Bank of Montreal analyst Jessica Fung said that after the devaluation of the Chinese yuan, gold and silver may get some support due to safe-haven investors' demand. Gold is expected to trade sideways, rather more down. If the second half of this year China's economic data shows stronger economic growth, «safe haven» effect may dissipate. Gold and silver prices are likely to rise driven by the interest rates hike by the Federal Reserve.
The world's largest gold ETF – SPDR Gold Trust holdings held steady compared to the previous day at the same level of 667.69 tons.
The weekly support is found at $1,085.00, $1,077.00, and $1,073.00. A weekly close below $1,085.00 opens way to $1,068.00 initially, later the metal is likely to grow towards $1,045.00, and $1,005.00. On the monthly chart, strong support zone is seen between $1,045.00 and $1,032.00. The metal fell below a 14-year ascending trend line on the monthly chart.
The 20Dsma is seen at $1,099.00. Bulls must close above $1,110.00 to retain the new momentum. The parallel resistance seems at $1,120.00, $1,122.00, and $1,128.00.
The intraday momentum oscillators are indicating overbought levels. The upmove was capped at yesterday's session.
Support is set at $1,102.00, $1,098.00, and $1,092.00. Resistance seems at $1,110.00, $1,115.00, and $1,120.00.
The trend suggests buying on dips with sl $1,091.00, intraday positional sl $1,085.00.
The material has been provided by InstaForex Company – www.instaforex.com