Last week, the price of gold strengthened, having reached its local highs since the end of October 2015. The price was growing due to the weakness in the American currency amid US macroeconomic statistics and uncertainty about whether the Fed will continue tightening its monetary policy. As some analysts suggest, the Regulator might decide to keep current interest rate on hold this year.
Friday’s data on US labor market was not absolutely negative. Though Nonfarm Payrolls fell sharply to 151K against 190K forecast, Unemployment Rate was down to 4.9% from 5.0%. Moreover, increases in Average Weekly Hours and Average Hourly Earnings should be noted.
Support and resistance
Bollinger Bands indicator on the daily chart is directed up. The price range is widening actively, but the price remains out of it. MACD is growing and keeping a strong buy signal. Stochastic is in the overbought zone and trying to turn down.
According to Bollinger Bands and Stochastic, a downward correction is possible. It is recommended to wait for clearer trading signals.
Support levels: 1162.56, 1156.40, 1152.15, 1148.43 (5 February level), 1141.60, 1136.37, 1132.52, 1127.85, 1122.10 (2 February low), 1115.70.
Resistance levels: 1170.00, 1174.33 (5 February high), 1179.13, 1182.74, 1186.50, 1191.21 (15 October 2015 high).
Long positions can be opened after the breakout and consolidation above the level of 1170.00 with targets at 1179.10, 1182.70 and stop-loss at 1165.00. Validity – 2-3 days.
Short positions can be opened after the breakdown of the level of 1161.00 with the target at 1150.60 and stop-loss at 1166.00. Validity – 3-4 days.