Gold and Japanese elections

XAUUSD, H4 and Daily

Gold topped at $1,289.56 overnight, just above the one-week low of $1,278.60  posted on Wednesday. Today the contract drifted lower to $1,279.20 as the U.S. dollar encountering demand after the Senate passed a budget that marks a significant step for the Republicans $1.5 tln tax cut plan. The move was catalysed by news that U.S. Senate passed a budget blueprint that along with Trump’s pending choice of who will take the helm of the Fed for the next term. The market continues to speculate on who the next Fed chief will be, and what impact a more hawkish chair will have on gold prices. The John Taylor and  currently is the front runner, and is seen as more hawkish that current chair Yellen.

Markets also focusing on the passage of the budget in the House, however all eyes are on the Japanese election this weekend. Gold and yen consider to be Safe havens for traders. We have seen recently traders getting out of yen and gold, known as safe havens, since the Asia market is and will be extremely volatile due to elections, and  European market is facing Political uncertainty.

However, despite gold got weaken ahead of the weekend, we have seen the last few hours that XAUUSD did not manage to get lower to the $1277.00 strong support level which is also a confluence of 61.8 Fibonacci level. We saw it instead, to move northwards,  up to $1284.67. The pair broke the  20-period MA  in the 4-hour chart, which is also the confluence of 50.0 Fib. level set since the rebound seen on October 6. As per the 4-hour chart, the pair is ready to form another Swing low today, after the swing low seen on wednesday’s trough. This will suggest further upside momentum.

Therefore on the break of 50.0 Fibonacci level , a Long position was taken , at $1283.57. Support is set below 61.8 Fibonacci level, at $1275.00, while Target 1 is at the yesterday’s highs, at $1290.00 which is also the 50-period MA in the 4-hour chart. Target 2 was set at 50-DAY MA,  at $1300.00.