Fundamental Analysis on April 17, 2023: Gold Formed an Important Bearish Pattern
FXOpen
A bearish engulfing pattern (1) has formed on the gold price chart. Two facts make it important:
→ the pattern has formed at the line (2) of the resistance of the trend channel, originating at the end of 2019;
→ the pattern was formed against the background of the discussed news about the US economy, which affected the value of the US dollar.
On Thursday, the price of gold rose (and the US dollar index fell to the lows of the year) after the publication of the Producer Price Index, and on Friday, gold fell sharply in price (and the US dollar index recovered accordingly) after the publication of data on retail sales which turned out to be below expectations (forecast: - 0.2%; actual: -1.0%).
The mixed movements can be interpreted as market participants trying to determine when the Fed can pause the tightening of monetary policy in order to curb high inflation. So far, it is expected that on May 3 the rate will be increased by 0.25%, after which a pause may follow.
From the lows of March, gold has risen in price by almost 13%. Having defined this movement as an impulse, we can assume that the bearish pattern is a sign of an incipient correction. In this case, the price of gold may drop to the $1,927-1,950 zone, formed by the support line (3) and the level of 50% of the impulse.
This forecast represents FXOpen Companies’ opinion only, it should not be construed as an offer, invitation or recommendation in respect of FXOpen Companies’ products and services or as financial advice.
Start trading commodity CFDs with tight spreads (additional fees may apply). Open your trading account now or learn more about trading commodity CFDs with FXOpen.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Stay ahead of the market!
Subscribe now to our mailing list and receive the latest market news and insights delivered directly to your inbox.
Latest articles
DAX 40: consolidation amid technology sell-off
A wave of selling in the technology sector that emerged earlier this week has weighed on European equities. The trigger was investor concern over the profitability of large-scale debt-funded investments by major US tech companies in AI infrastructure. The Nasdaq
Euro Hits Fresh Yearly Lows Amid Dovish ECB Signals
The euro remains under pressure following weak macroeconomic data from the euro area and fresh signals that the European Central Bank is prepared to maintain a more accommodative monetary policy stance. Data released yesterday pointed to a deterioration in business
Pound at Key Levels: Markets Assess Impact of Political Uncertainty in the UK
The British pound remains under pressure following increased political uncertainty in the United Kingdom triggered by the Prime Minister’s resignation. Investors are assessing potential shifts in the political and economic policy outlook after the head of government stepped down,