XAU/USD: gold prices are consolidating

Current trend

Yesterday gold prices changed insignificantly and stayed around lows, renewed on November 30.

The instrument is under pressure of the strengthening USD, which is supported by the anticipations of Fed’s interest rate increase next week. In addition, the investors are inspired by US Senate’s approval of the tax reformation draft low, which in particular implies the cut of corporate tax from 35% to 20%.

The decrease of tax burden is expected to stimulate US economy. Many American companies, which are obliged to be registered in the other countries, can return to USA, and this will push the inflation growth, increase employment level, strengthen the investment flow and will contribute in the Fed’s interest rate increase policy.

Support and resistance

On the daily chart, Bollinger Bands are moving flat. The price range is widening, letting the “bears” to renew local lows. However, it is better to use channel-trading strategy, as the signals are reflecting the correction development in the short term.

MACD is still going down, keeping sell signal (the histogram is below the signal line). It is better to keep current short positions, but not to open new ones.

Stochastic is ready to reverse upwards, reaching the level of 20, which is the formal border of the oversold area. Long positions can be opened in short and very short term.

Resistance levels: 1276.87, 1279.72, 1283.77, 1288.07.

Support levels: 1273.07, 1269.99, 1267.30, 1263.37.

Trading tips

Long positions can be opened after breakout of the level 1276.87 with the targets at 1283.77 or 1285.00 and stop loss at 1273.07. Implementation period: 2-3 days.

Short positions can be opened after breakout of the level 1269.99 with the target at 1263.37 and stop loss at 1274.00. Implementation period: 2-3 days.