Gold Hits 7-Year High; Crude-oil Prices Settle at a Nearly 3-Week High
By: Cpt Markets
Tags: Investment, Forex, Economics, Cpt Markets, Forex Trading

Justin Zhou| Analyst | CPT Markets|Thursday, 20th February 2020

Market Review

The U.S. dollar continued to climb on February 19, and the U.S. dollar index hit a new high of 99.72 since May 2017. Earlier US data showed that inflationary pressures may be increasing, giving support to the U.S. dollar; fearing that the Japanese economy might fall into recession, the yen It fell to the lowest in nine months. Concerns over the impact of the epidemic and speculation about the central bank’s stimulus measures have pushed the precious metals up. Spot gold hit a new high of $ 16,129.98 per ounce since March 2013. Fueled by risks in Venezuela and Libya, oil prices rose more than 2% to a three-week high.

Fundamental Analysis

The minutes of the Federal Reserve in the early hours of Thursday showed that officials believe that the current monetary policy is “for a period of time” appropriate. Maintaining the current policy stance for a period of time may help support US economic activity and employment, and the US PPI in January was better than expected , Both support the US dollar. But investors need to be wary of the wording “for some time” given the dollar’s high level. If the economic data in the market is lowered, the monetary policy will also be adjusted, and then the market is expected to double the bearish pressure on the dollar. On the other hand, gold remains strong and fundamentals continue to be good. But you need to be wary of a profitable closing at high levels.

Technical Analysis — Gold

Yesterday, the price of gold hit a new high of $ 16,129.98 since March 2013, and closed above $ 1610. Public health emergencies have raised market concerns that the global economy may face a significant slowdown. Central banks in various countries may respond to the economic downturn by taking further interest rate cuts , Which makes the characteristics of gold hedge investment more attractive. Current fears and greed are driving most markets higher.

In terms of technical structure, we still need to be clear. Gold is still a very clear bullish trend in the short term. Although the suppression of the high 1610 line still takes effect, the price needs to be cautious and not blindly bearish here. First, gold is currently at a 7-year high, even if a breakout cannot be completed. But just as long as the fake breakthrough will bring rapid rise. Secondly, although gold did not break through under pressure at 1610, even if a pullback decline occurs, it will be transient. It is difficult to reverse the bulls pattern without strong suppression.

On the other hand, today the 1610 line is the key to the market. Although it is a long market, it is still possible that the 1610 pullback will not stand today. Gold has risen by nearly $ 60 in the short term. It is also very likely that there will be a drop and recharge, but it still takes time to verify if you want a big drop or the 1610 line to form the top. So today, be wary of 1610 front-line gains and losses, and pay attention to market risks.

Support: 1600, 1593

Pressure: 1620, 1640

Technical Analysis — Crude oil

Oil prices rose more than 2% on Wednesday, reaching a three-week high and have now risen near the 54.0 mark. Oil prices have been boosted by the risk of oil supply in Venezuela and Libya. There have been many rounds of analysis in the early stage of oil prices, and the main focus is on the competition between global demand and the output of oil producing countries. For oil prices around 50.0, a bullish idea was given. It is just around the corner when the market is extremely bearish and bearish.

Technically, the shock that lasted for two weeks yesterday finally broke through. After breaking the key point 52.30, crude oil completed a wave of soaring. The trend is as expected, and the breakthrough will open a new spatial pattern without excessive competition and false breakthroughs. After the high shorts were penetrated, a large influx of buying orders led to a continued rise in oil prices. The bullish trend continues for oil prices, but there are two high pressures to suppress, one near 54.5 and one near 55.8. In general, the bulls are still continuing after the rally, but we need to be wary of high selling pressure and a decline.

Support: 52.50, 51.20

Pressure: 54.5, 55.80