The Gold Price Consolidation in order to Linger as RSI-Flops of the Front of the Overbought Zone

The Price Of Gold, ” Talking Points

The price of gold struggles to maintain the advance from earlier this week, even if the Federal Reserve officials retain a dovish forward guidance, and the precious metals may consolidate until the end of the month that the The Relative Strength Index (RSI) seems to have flopped ahead of overbought territory.

The Gold Price Consolidation in order to Linger as RSI-Flops of the Front of the Overbought Zone

The price of gold has traded to fresh yearly highs during each month of the year 2020, and a break above the November 2012 high ($1754) may keep bullion afloat that the Federal Reserve is preparing to launch the The Primary Liquidity Facility, with the The Main Street Loan Program over the next few days.

It seems that the Federal Open Market Committee (FOMC) will actively expand its balance sheet over the coming months, as the Vice-President of the Richard Clarida warns that the AMERICAN economy shouldthe contract at an unprecedented pace in the second quarter.” with the agent as to say that “additional support from monetary and fiscal policies may be called for.”

It remains to be seen whether the FOMC will deploy more unconventional tools in 2020, Clarida insists on the fact that the committeewill the wind-down of these credit facilities, at the time we determine, in the circumstances that we are facing are more unusual or the urgency of theand the central bank may carry a wait-and-see over the next few months, as U.S. lawmakers try to pass another stimulus program, labeled the HERO of the Act, the.

However, the FOMC seems to be on track to approve a dovish forward-guidance at the time of the next interest rate decision on 10 June, as President of the Jerome Powell told the Congress that ” the committee”, committed to using our full range of tools to support the economy in these difficult timesand the threat of a tight, the recovery, which could push the central bank to deploy more unconventional tools such as a Vice-President of the Clarida insists on the fact that “they, the Federal Reserve will continue to act forcefully, proactively, and aggressively.”

At the same time, Fed officials may continue to tame the speculation for a a negative interest rate policy (IT) as President, Powell, and Co. “expect to keep interest rates at this level until we are convinced that the economy has weathered recent events” but the the low interest rate environment, the long balloon the central bank balance sheets can act as a safety net for the goldas the marketparticipants searched for an alternative to the fiat currencies.

In turn, the price of gold may continue to present a behavior to the upside, as for the trade to fresh yearly highs during each month of the year 2020.

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Gold Price-Daily Chart

Source: The Negotiation Of The View

• The opening of the range at the horizon 2020, it instilled a constructive outlook for gold prices, the precious metal is seeing the 2019 is the high ($1557), with the Relative Strength Index (RSI) pushing into overbought territory during the same period.
• A similar scenario was solidified in February, with the price of gold is resistant to the monthly low ($1548) during the first full week, while the RSI broke out of the bearish formation from earlier this year to push back into overbought territory.
• However, with the monthly opening range of This axis is less and less relevant in the middle of the upswing in volatility, with the decline from the monthly high ($1704) leads to a break of the January low ($1517).
• Nevertheless, the reaction of the old area of resistance at around us $1450 (38.2% retracement) to $1452 (100% real) has instilled a constructive outlook for the bullion as far as the RSI changed course to advance into oversold territory, and broke out of the bearish formation from November.
• In its turn, had been erased from the March high ($1704) to the tag to a new annual high ($1748), in April, with the behaviour, also taking shape in May, as the precious metal trades-to-a-fresh-2020 ” high ($1764).
• The RSI highlights a dynamic that is similar, as the unit breaks out of the downward trend carried over from the previous month, but the bullish momentum may ease in the next few days, as soon as the indicator, seems to have flopped ahead of overbought territory.
• Waiting for a close above the $1754 (261.8% expansion) region, which aligns with the November 2012 high ($1754)to bring the $1786 (38.2% expansion) of the area on the radar, with the 2012 high ($1796) is next.
• However, the string of failed attempts to close above the $1754 (261.8% expansion), the region could push the gold price towards the September low ($1670), which aligns with the $1676 (78.6% expansion) region, with the next hurdle to the downside, coming around $1655 (161.8% expansion).

— Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong