Gold market subdue under bearish pressure despite of bullish recovery attempt in last Friday

There has been a decent bullish move in the gold market from the very beginning of the year 2017 as the dollar slipped against its all major rivals in the global economy. The price of gold started its bullish recovery in the market after hitting a critical support level at 1122.04 in the global market. The U.S dollar gained its strongest bullish momentum in the market upon the rate hike on last December by FED.There FED hikes their interest rate on the basis of 25 points in the global market and also stated that they are going for possible three rate hike in the year 2017.During that time the U.S dollar index which is the measure of the overall value of the green bucks strength against the six major currency pairs in the global economy. However, the green bucks lost most of its bullish strength in the global market after the newly elected president Mr. Trump failed to keep his promise regarding the tax cut policy and increment in the fiscal spending. On this event, the gold market rallied significantly higher in the global economy breaking critical resistance level in the market.

Bullish recovery attempt in gold price: In the last Friday the green bucks lost its ground against all its major rivals in the global economy after FED chairperson Janet Yellen cleared lots of doubt regarding their next rate hike in the FOMC meeting minute. She clearly stated that the month of March would be appropriate for the first rate hike in this year and despite such a hawkish statement the market retreated against the U.S dollar due to strong negative U.S consumer sentiment. In the last week, there has been a 0.45 percent drawdown in the gold price and the precious yellow metal traded at $1227.65 a troy ounce. The current performance of U.S economy is not that stable and many investors are thinking that a rate hike in March will be immature rate hike which will significantly weaken the U.S dollar in the global economy. The service PMI data also showed a lack of performance in the recent days as it missed the forecasted expectations of 57.6 according to the month of February. Since the price of gold is measured in U.S dollar a slight variation in the current strength of the green bucks significantly affects the gold market. However, if the FED comes up with a hawkish hike in the next FOMC meeting minute then we will see a strong selling pressure in the gold market in near future.

Current U.S consumer sentiment: The newly elected U.S president Mr. Trump gave the dollar bulls a great hope in the market after he announced that the U.S government is going to increase the fiscal spending and include tax cut policy in the market. Most of the leading investors made a decent profit in the global market by buying the green bucks at that time. Such an optimistic statement from the newly elected president Mr. Trump gave created a strong U.S consumer sentiment in the global market. However, the dollar lost most of its bullish strength in the global market prior to the closing of the year 2016.But the dollar bulls are still waiting on the sideline and waiting patiently for the right opportunity to buy the green bucks in the market. Meanwhile, the leading gold investors are in fear since there remains a strong possibility of a rate hike in the next FOMC meeting minute. The gold market will tumble hard in the global economy if there is a rate hike in the next FOMC meeting minutes. Most of the leading economist in the global market is recommending the gold buyers to stay cautious since a high impact news regarding interest rate decision is going to release in the next FOMC meeting minutes.

Possible market scenario: There has been a massive chaos in the global market regarding the interest rate hike decision by the FED in the upcoming FOMC meeting minutes. Most of the leading gold investors are thinking that the market will be ruled by the green bucks in near future if FED hikes their interest rate in the FOMC meeting minutes. However, some of the leading economists are thinking that the dollar is currently overvalued and even an interest rate hike decision is not good enough to impose long-term bullish momentum in the gold market. All the large banks and institutions along with the retail traders are cautiously looking for the upcoming week major data release of the green bucks since a solid output from the U.S economy is required to impose long-term bullish trend in the U.S dollar index. On the contrary, the price of gold has formed nice bullish Doji in the daily chart prior to the market closing which clearly creates a strong doubt into the mind of gold bears.

Summary: The financial market is now overclouded with the pending rate hike decision. Most of the professional investors are waiting on the sideline for a clear clue so that they can enter the market with a precise direction. However, some of the aggressive traders are buying the deeps of the green bucks since they are thinking about three projected rate hike by the FED in this year. Most importantly the U.S central bank will also pressurize the FED for at least two rate hike and this has given the U.S dollar a solid bullish platform in the global market.