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Market News Gold tops $1,800 mark again as dollar slips(with trading strategy)

Gold tops $1,800 mark again as dollar slips(with trading strategy)

Big global worry! Delta strain spreads globally and Pfizer vaccine less effective against Delta variant! Central banks are dipping into the gold market again.

LEO
2021-07-06
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Gold rose above the $1,800/ounce psychological level on Tuesday to hit a three-week high, as a pullback in the dollar lifted bullion demand, while investors awaited minutes from the U.S. Federal Reserve’s June meeting for clarity on monetary policy.


Spot gold rose 1.01% to $1808.67 per ounce and the spot silver rose 0.88% to $26.680 by 11:50(GMT+8).


“It’s mainly a weakening U.S. dollar that is boosting gold prices. Gold was sold down heavily after the June FOMC meeting and now that expectations have been priced in, buyers are back to the market,” said Margaret Yang, a strategist at DailyFX.


“However, gold’s upside potential might be limited against the backdrop of global hawkish turn in monetary policies. Don’t think prices will recover back to the early June levels anytime soon.”


The dollar weakened 0.2%, moving further away from a three-month high hit last week, making gold less expensive for other currency holders.


Focus this week is on minutes from the Fed’s latest meeting due out on Wednesday, after a hawkish tilt from the U.S. central bank last month in which policymakers projected a start to rate hikes in 2023, sending gold prices below the $1,800 level.


Higher interest rates increase the opportunity cost of holding bullion, which pays no interest.


“Gold prices may be able to hold onto recent gains but staying above the $1,800 resistance may not be in the traders’ radar until the latest minutes of the Fed’s meeting is released,” Avtar Sandu, senior commodities manager at Phillip Futures, said in a note.


Australia’s central bank left its cash rate at a record low of 0.1% and said it was likely to remain there until 2024, though it did pare back its bond-buying campaign.


Central banks are dipping into the gold market again


Central banks from Serbia to Thailand have been adding to gold holdings and Ghana recently announced plans for purchases. This comes as the threat of accelerating inflation looms and a recovery in global trade provides the firepower to make purchases for diversification.


The Bank of Ghana to implement a Gold Purchase Programme designed to purchase locally-produced gold. Vice President Bawumia said the benefits of having a healthy amount of physical gold in a country's reserves are varied and enormous, including shoring up the value of the local currency. The BoG decision, he indicated, is a "game-changer.".


Thailand was the biggest buyer, adding a further 46.7t in May and accounting for a whopping 82% of total net purchases for the month. Turkey also increased its gold reserves by 8.6t during the month, bringing official sector reserves to 415t. Brazil increased gold reserves by 11.9t, its first addition since November 2012. Gold reserves now stand at 79.3t (1% of total reserves) which is the highest level since November 2000. Kazakhstan (5.3t), Poland (1.9t), and India (0.9t) were the other notable buyers during the month


The National Bank of Serbia said, "Long term, gold is the most significant guardian and guarantor of protection against inflationary and other forms of financial risks,". Serbian President Aleksandar Vucic recently announced the central bank intends to boost holdings of the precious metal to 50 tons from 36.3 tons.


Looking at investment bank commentary James Steel, chief precious metals analyst at HSBC "If a central bank is looking at diversifying, gold is a marvelous way of moving out of the dollar without selecting another currency,".


The World Gold Council (WGC) said following a higher level of monthly net purchases in March and April, our latest data published today shows that this trend continued into May. Central banks net purchases totaled a healthy 56.7t during the month, down 11% M/M but 43% above the YTD monthly average.


Delta strain spreads globally


The delta variant rapidly spread around the world and has been identified in at least 98 countries to date. It’s now the dominant strain in countries as diverse as the UK, Russia, Indonesia, Vietnam, Australia and Fiji. And it’s on the rise.


In the United States, delta made up one in five COVID cases in the two weeks up to June 19, compared to just 2.8% in the two weeks up to May 22.


Meanwhile, the most recent Public Health England weekly update reported an increase of 35,204 delta cases since the previous week. More than 90% of sequenced cases were the delta variant.


In just two months, delta has replaced Alpha as the dominant strain of SARS-CoV-2 in the UK. The increase is primarily in younger age groups, a large proportion of whom are unvaccinated.


The Pfizer vaccine proved to be less effective in keeping people from getting infected in recent weeks in Israel. The vaccine had shown efficacy of 94 per cent previously but between June 6 and early July, it showed 64 per cent efficacy. The Israel health ministry said that the drop was observed at the Delta variant spread across the country. The spread also coincided with the lifting of restrictions in the country. However, the Pfizer vaccine continues to provide strong protection against severe COVID-19, according to government data.


Despite increased infections, the government data also showed that the Pfizer shot protects people from severe illness. Its effectiveness at preventing hospitalisation fell from 97 per cent in an earlier government study to 93 per cent.


Pfizer spokeswoman Dervila Keane pointed to research showing the vaccine’s continued protection against new variants -- albeit in slightly reduced capacity in some variants. She said that the evidence shows that Pfizer vaccine will continue to protect against these variants.


The Delta variant first found in India is spreading across the globe rapidly. This variant has led many governments to extend their curbs on travel and business.


Trading strategy (Source: Trading Central)

Pivot: 1793.00


Our preference: long positions above 1793.00 with targets at 1814.00 & 1823.00 in extension.


Alternative scenario: below 1793.00 look for further downside with 1788.00 & 1783.00 as targets.


Comment: the RSI is bullish and calls for further advance.


Supports and resistances:

1830.00

1823.00

1814.00

1805.30 Last

1793.00

1788.00

1783.00

Guideline for Trading Central strategy


Trend chart reading guideline

1. First look at the time period in the upper left corner of the chart:

‧30MIN and 1H chart shows the trading suggestions for intraday

‧Daily chart shows the market trend analysis in next 2-3 days


2. The blue horizontal line on the chart marks the pivot: pivot indicates the reversal of the market. When the price is above the pivot, it indicates an upward trend, when the price is below the pivot , it indicates a downward trend. When the price breaks through the pivot, the trend is reversed.


3. The red and blue thin curves in the Candlestick chart chart are technical indicators: Red line is  MA20+Bollinger bands, Blue line is MA50. under the Candlestick chart chart are also the technical indicators:  Blue line is RSI, Red line is 9MA;


4. The green horizontal line is the resistance level for a price increase, and is also the profit target for long orders; the red horizontal line is the support level for a price decrease, and is also the profit target for short orders.


How to use TC strategy?

1.[Pivot] is the reversal line of the market trend. When the price up the pivot line which means in Bullish, you can open a long position or Buy. on the contrary, when the price under pivot line which means in bearish. You ‘d better make short positions or Sell. 

2. [our preference] is the main trading suggestion for your reference. You can exit your trading refer to this target or close positions before it.

3. [Alternative scenario] is the plan B for your reference. 

4. [Comment] is the technical analysis of market trends and technical support for trading strategies. 

5. [Supports and resistance] Supports are levels where the price tend to find support as it falls.

Resistances are levels where the price tend to find resistance as it rises. So, exit before the trend reverse.

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