FX.co ★ Safe haven gold to lose momentum? June 27, 2019

Safe haven gold has been winning favor with investors amid uncertainty in the global economy. The precious metal managed to sustain and retain momentum above $1,400. However, analysts expect a retracement along the way before the price hits the $1,500 psychological level.

Gold price dipped for a while for some reasons. Gold is taking advantage of the weaker US dollar. However, USD bulls have again entered the market. Federal Reserve Chairman Jerome Powell said in a speech on Tuesday that monetary policy would be accommodative to ensure sustainable growth of the US economy. Moreover, investors are betting on a half-point rate cut at the nearest policy meeting in July. This scenario will continue feeding the rally in gold.

Another most important point to focus on is relations between US President Trump and Fed Chairman Powell. As their relations are getting worse, gold may regain momentum. If the Fed opts for a smaller-than-expected rate cut, of, say, 25 basis points, it will probably amplify Trump's criticism of both the central bank and the Fed chairman. Donald Trump is putting pressure on the central bank for the rate cut. Besides, the president also threatened to remove Jerom Powell from his position.

To sum up, gold is expected to pull back towards $1,320-50 before it resumes the bullish trend. Though the overall bias is strongly bullish, the current price is far from the mean i.e. dynamic level of 20 EMA that indicates further bearish pressure. The price has formed bearish divergence supporting downward pressure. This has already increased the probability but the price needs to be carefully monitored as the bullish bias is very strong at the moment.

SUPPORT: 1,290, 1,300, 1,320, 1,350

RESISTANCE: 1,400, 1,425, 1,450, 1,500

BIAS: BULLISH

MOMENTUM: VOLATILE