There has been a decent bullish rally in the gold market after the mighty U.S dollar suffered an extensive loss in the global market prior to the closing of the year 2016.The green bucks gained an extreme level of bullish power in the global market after the U.S presidential election held on 8th November 2016.After becoming the newly elected president Mr. Trump stated that they are going to increase the fiscal spending and incorporate tax cut policy. But four months have been passed yet the consumers has not been facilitated and this has created strong bearish sentiment in the global market. The gold bulls started their first bullish rally in the market after the slip of the U.S dollar index from its 14 years high in the global market. Most of the leading gold investors made a decent profit in the last couple of months by entering long into the gold market. However, the price of gold is now trading near a critical resistance level in the market and strong negative data release in the U.S economy will fuel up the gold bulls which will ultimately help them to clear the current resistance level in the market.
Bullish surge in the gold market: The price of gold surged higher in the global market and secured a new session high on the last Friday prior to the market closing. The U.S average hourly income and Non-farm employment change came negative in the last week and it caused the recent surge in the price of gold in the market. Most of the leading gold investors are now overly cautious since the price is trading near the critical resistance level in the market and a clear break of the current resistance level will confirm another bullish rally in the price of gold. According to the leading economist in the world, there is a strong possibility of a bullish rally in the gold market in the near future. The price of gold gained near about 0.61 percent and traded at $1257.00 troy an ounce on the Comex division of the New York Mercantile Exchange securing 5 months high prior to the week closing. However, the strong bullish surge in the price of gold was immediately taken out by the dollar bulls in the market as the rate hike decision by FED in the month of June remained unaffected in the global market despite the weak data release in the U.S economy.
The impact of U.S rate hike: The last two-month performance of the U.S economy is significantly weak in the global market and most of the professional gold investors bought this precious yellow metal in the deep and made a decent profit in the market. Since the price of gold is measured in a dollar a slight variation in the strength of the dollar causes a significant change in the gold market sentiment. Though the current economic performance of the U.S economy is not up to the market but the investors are still fear to buy the precious yellow metal due to the possible two pending rate hike by the FED. If FED chairperson Janet Yellen manage to go for another rate hike in the month of June then we will see a strong bearish pressure in the gold market in near future. The upcoming week is going to play a major role regarding the next movement of the gold market as a strong turnaround by the green bucks in the global market will push the gold market lower toward the critical support level. Most of the leading gold investors are currently on the sideline and waiting for the clear break of the current resistance level to open fresh new long position in the market.
Current market sentiment: The last two-week performance if the U.S economy was significantly week and most of the leading gold investors booked a decent profit in the market by trading the weakness of the green bucks. In the last Friday, the high impact U.S news release showed a significant decline in the Non-Firm payroll data and average hourly income of the U.S economy. Most of the traders thought that the price of gold will surge through the current resistance level in the market but it failed to keep its bullish momentum in the market as the dollar retreated back with strong bullish momentum. Some of the leading economists in the world are thinking that the FED will hike their interest rate on the month of June. An imminent rate hike in the month of June is most likely to create another strong bearish pressure in the gold market but before that, we are most likely to observe steady gain in the price gold. But if the FED fails to hike their interest rate in the month of June then we will see a prolonged bearish trend in the U.S dollar index is most likely to bring strong buying pressure in the gold market.
Summary: The price of gold is trading higher in the global market and in the last week it secured 5 consecutive week gains in the global economy. Most of the conservative gold investors are currently waiting on the sideline and waiting for a clear break of the current resistance level to initiate fresh long orders in the market. However, the traders are overly cautious since the green buck remains broadly supported in the global market due to the pending rate hike decision in the month of June by FED.