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    XAU/USD: correction is on the way on 10.02.2016

    Since the beginning of the year the price of gold has increased by 10%, regaining the losses of last year over 1.5 month. Today, since the opening of European session, the price is undergoing correction after maintaining the level of 1188.00. The decline in the price of gold today is accompanied by the rise in quotes of the risky stock assets. World stock indices are increasing, and the uSD is growing versus Euro and precious metals.

    However, it is difficult to predict the movement of gold price after today’s speech by Janet Yellen. Market participants’ expectations of the increase in the interest rate have lessened due to the US poor economic data and comments of the US Fed representatives about stringent financial and economic conditions.

    In such conditions, the rates can be raised in a slower pace than expected. If Janet Yellen drpes hints on the US Fed meeting in March, and confirms possibility of the rise in interest rate, the USD will have a strong momentum. The price in precious metals and gold will drop. Otherwise, the price can return to the highs of 1.2000. However, further growth is unlikely.

    From the technical point of view gold is overbought and downward correction is in the making. At the end of trades in NYMEX futures of oil WTI fell from 5.9% to 27.94 USD per barrel. The price of commodities is also decreasing.

    In this situation and due the program of monetary policy tightening adopted by the US Fed, investors’ interest to the USD will increase. As long as the fluctuation in the market reduces, the demand for the risky currencies will increase. Investment attractiveness of gold will reduce in case of the rise in the interest rate.

    Janet Yellen’s speech attracts much attention because it can shed light on the Fed’s interest rate plans and the upcoming meeting of the US Fed in March.

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