There has been a massive confusion into mind of gold investors in the last year as the price of yellow metal sank into the market due to the intense heat of the green bucks. Most of the gold investors were overly cautious about the gold price since it was breaking critical support level one after another. The price of gold is measured in the dollar so a slight variation in the value of the green bucks significantly impacts the gold market in the global community. The U.S dollar gained its first bullish momentum in the market on 8th November during the U.s presidential election held on 2016.Mr. Trump becomes the newly elected president and gave the dollar its first strongest boost in the year by stating that they are going to increase the fiscal spending and going to inaugurate tax cut policy in the near future. Such an optimistic statement from the newly elected president created extensive positive consumer sentiment and push the green bucks higher in the global market. On that event the price of gold sharply dropped in the market as the weight of the green bucks was significantly heavy in the global world.
Gold price paving its way high: The price of gold significantly rallied high in the global market in the last week and most of the professional traders were thinking that the bulls have steady control over the market. The non-firm payroll data also came negative in the last week and this has given the traders a sign of relief. However, on the last Friday, the price of gold fell down in the market as the average hourly income of the U.S government increased by 0.4%.But most of the expert investors are thinking it as a bearish retracement in the price of gold and they are optimistic that the price of gold will rally higher in the global market in the near future. According to the New York Mercantile exchange, the price of yellow matter traded at $1178.95 a troy ounce. The price of copper also gained 0.24% in the last week and traded at $2.541 a pound. However, some of the technical analysis are thinking that the bearish pressure is imminent in the gold market unless the price clears the nearest critical resistance level at 1196.67 in the market. Most of the professional gold investors will open long once the market breach that resistance level in the market and before that they are going to stay on the sideline as the green bucks’ sentiment is still strongly bullish in the global economy.
Projected three rate hike by the FED in 2017: In the last year, the FED have increased their interest rate on the basis of 25 points in the market. On that event, the dollar gained its strongest bullish momentum in the market and the U.S dollar index surged a recorded high in the global market. During that event, the price of gold hit a critical support level in the market and most of the traders were overly cautious since 1122.27 level was the strongest support level in the market and breach of that level would bring strong bearish pressure in the market. However, the price of gold managed to kick off from the ground from that level as the U.S dollar index fell from its 14 years high in the market. Though most of the professional traders are thinking that the bullish reversal has taken place in the market but the leading researchers are worried about the possible three rate hike by the FED in the year 2017.If the FED manages to go for three rate hike in this year then we will see a record low price in the gold market.
The conflict between technical and fundamental analysis: Technically the price of gold is trading near a critical support level and the price has rallied hard in the market after hitting the critical support level at 1122.27.To be precise the recent bullish move in the gold price strongly support by technical analysis but when it comes to fundamental analysis the overall bias of the gold market still remains bearish. Since the FED is going for possible three rate hike in this year, there is strong chance that the green bucks will break the 14 years high in the U.S dollar index. If the U.S dollar index breaks its 14 years high in the market then we will see a significant low in the market and the current support level at 1122.27 level will turn into resistance since it is most likely to be breached. Most importantly the U.S central bank will also pressurize the FED for at least two rate hike before the month of November so that they can adjust their current inflation rate. And if the FED manages for at least two rate hike in this year than all the bullish momentum in the price of gold will fade away due to interest rate hike.
Summary: The price of gold has bounced off from a critical support level in the market and most of the professional gold investors are thinking that the bullish reversal has already taken place in the market. But when it comes to fundamental analysis the gold bulls are under direct threat since the FED has projected three rate hike in this year. However, most of the traders will be going long in the gold market and taking short profit. Considering all the facts the gold investors are now in doubt about the next possible movement of the market.