Strong demand for protective assets provoked the growth of the value of gold to the local maximum of 1364.79. This year, gold is not the first time getting to the key mark of 1365, but it's impossible to break this level with bulls XAUUSD, not to mention the fastening above. Today we are seeing a price pullback, as Donald Trump somewhat softened his rhetoric, and the Fed's protocol published yesterday strengthened the positions of the US currency.
However, these fundamental factors look shaky. At any moment, the geopolitical situation may worsen, and the dollar will again be under considerable pressure, while gold will get an excuse to restore lost points.
Yesterday, tweets of the impulsive Trump stirred the world. Initially, he threatened Syria with "smart" missiles, and then unexpectedly suggested that Russia end the arms race, as "all nations need to cooperate." Such a mood drop is typical for the current US president, but this does not mean that the Syrian problem approached its resolution.
On the contrary, objective factors indicate that the probability of a military strike against Syria increases with every minute. First, despite the fact that the "virtual Trump" has replaced anger at mercy, a group of American warships, led by the aircraft carrier Harry Truman, continue to move to the Eastern Mediterranean. This process was connected and Britain. According to the information of the English press, Teresa Mei yesterday gave the order to send the submarines of the Kingdom to the distance of a missile strike against Syria. In addition, she interrupted her Easter vacation and convened an extraordinary meeting of the government on this issue. According to the sources of the British press, a military strike by British submarines can be caused already this evening. The European Organization for the Safety of Air Navigation has already issued a warning to airlines, calling for caution in the eastern Mediterranean in the next 72 hours in connection with possible military strikes.
Also yesterday, there was information that Russian warships had left the Syrian port of Tartus and are now deployed at sea, because of the likely US actions in this region. In addition, the head of the State Duma Defense Committee, Vladimir Shamanov, said that the Russian air defense forces have been deployed in Syria, and the entire contingent has been put on combat alert. In turn, the head of the Pentagon, James Mattis, said yesterday that his agency is also ready for a military scenario in Syria.
All this suggests that the escalation in the Syrian region is very, very likely. Trump's peace-loving tweet has not changed the overall situation. In the context of the foreign exchange market, this means that protective tools, including gold, will continue to be in demand, especially if the military scenario is implemented.
Against this backdrop, the protocol of the March meeting of the Fed, published yesterday, looks insignificant. Moreover, there are few reasons for optimism there. Members of the regulator expressed general confidence that inflation would reach the target of 2%, and this fact will allow to review the smoothness of tightening monetary policy.
However, it is necessary to note two nuances here. The March meeting of the Fed took place even before the publication of the latest data on inflation, according to which the monthly CPI index fell into a negative area. Nonfarms also turned out to be unconvincing in March, unemployment remained at the same level, and the number of employment growth noticeably decreased.
In addition, the Fed allowed the probability of accelerating rates of rate hikes over the next few years. That is, the time frames, voiced by the members of the FRS, look too distant and vague. The Fed ignored the possible consequences of the new trade relations between the US and the PRC, and did not comment on the growth in the deficit of the US budget and the current account of the balance of payments. In other words, the protocol of the March meeting of the regulator could only provide temporary support to the dollar, but in general the situation did not change, and the basic scenario of the Fed (three increases this year) remains in force.
Thus, the fundamental background indicates a high probability of repeated growth of gold to the level of the local maximum (1364.79). All attention is focused on the events in Syria. If the United States and Britain decide to implement a military scenario, the market will again panic, and protective tools will again be in active demand. In addition, it should be noted that the yield of 10-year Treasury bonds remains rather low (at the moment - 2.779%), so a significant drop in the metal below the level of 1352 looks unlikely.