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XAU/USD: the price continues to fall _25/05/2016

Technical analysis and trading recommendations -

Keep coming out strong US macroeconomic indicators reinforce the opinion of market participants about the imminent increase in interest rates in the US in June or July.
Published last week data showed a sharp drop in the number of initial claims for unemployment benefits last week. The decline was the most significant since the beginning of February, and points to labor market stabilization in the US.

According to the data released yesterday, new home sales in the US rose by 16.6% in April compared with the previous month and amounted to 619 000 homes per year (forecast was 2.0%). This is the fastest pace in more than eight years.

The increase in home sales is also encouraging related fields of industry, services, labor market.
The dollar index Wall Street Journal, which tracks the US currency against a basket of 16 major currencies, according to the results of Tuesday rose 0.2%.
As stated in the CME Group, futures on interest rates account for 38% probability of a rate hike in June (compared to 30% earlier on Monday).

Fed leaders also made it clear that does not rule out raising interest rates in the US in June, if the incoming economic data show improvement in the economic situation in the US.

So, the president of the Federal Reserve Bank of Philadelphia, Patrick Harker said Monday that the Fed may raise interest rates three times this year, and an increase could begin in the next meeting of the bank, scheduled for June.

In the expectation of interest rate in the US in June, the US dollar continues to strengthen the financial markets, and the price of gold - to decline.
Higher interest rates usually put pressure on gold. The cost of borrowing on its acquisition and storage is growing, and the gold is more difficult to compete with more profitable relatively safe instruments, such as Treasury bonds.

Now the attention of market participants will be focused on the performance on Friday (14:30 GMT) Fed chairman D.Yellen. If her comments confirm the Fed to tighten policy signals, it will support the dollar in the entire financial market. A pressure on the gold price in this case will continue until June 15, when the Federal Reserve decides on interest rates in the United States.

Wednesday, 25 May, 2016 / 10:35

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