Gold Closes Above $2,700, CHF to USD Rate Approaches 0.90

The CHF to USD rate moved 1 cent on Friday, as USD/CHF surged to the highest level since July, while Gold closed the week above $2,700, which puts it officially back on the bullish trend after the retreat in the first half of November.

Due to increased demand for safe haven assets amid rising geopolitical tensions and the increasing probability of U.S. interest rate reduction, GOLD prices saw their biggest weekly rise in a number of years, rising over $150. Following a robust increase from $2,000 to $2,790 this year, gold prices fell during the first two weeks of November as a bullish reversal was indicated by a doji candlestick at the top.

Gold Chart Weekly – Bullish Engulfing Candlestick After the Bounce

Last week, the rapid decline caused XAU/USD to drop to $2,536.77. A stronger US currency and profit-taking were the main drivers of the drop. However, on the weekly period, the drop halted around the 20 SMA (gray), which served as support. This week, the bounce occurred and the gains exceeded last week’s loses, so this week’s candlestick is a bullish engulfing one, indicting further upside momentum in the weeks to come.

Swiss Franc Technical Analysis

USD/CHF has been less volatile than Gold, however, the Swiss Franc and XAU are moving in opposite directions, despite both being safe havens. This forex pair tumbled from March until September, but has been going through a strong recovery in the last two months, gaining around 5.5 cents.

Although it encountered resistance at moving averages along its ascent, USD/CHF has recovered well from plunging below 0.84 in early September and reaching 0.8956 today. The pair maintained its upward momentum after the US elections, breaking above all moving averages, helped by the weak economic performance from the Eurozone, with Services PMI falling in contraction this month.

USD/CHF Chart Weekly – Breaking Above the 100 SMA

This means that the economy of Switzerland will be affected negatively, which might force the Swiss National Bank to go into negative territory with interest rates, as they mentioned. As a result, USD/CHF broke above the 100 SMA (green) on the weekly chart, which opened the door for 0.90 now. The SNB chairman also made some comments, but nothing to move the markets.

Swiss National Bank Chairman Schlegel

• Switzerland needs flexible inflation target, as it currently has
• Inflation target has allowed central bank to respond flexibly to shocks
• Central bank’s main tools are policy rate, FX interventions
• Global economy slowdown has hit Switzerland harder due to currency appreciation
• Recognizes franc’s safe haven nature
• Will continue to ensure price stability

USD/CHF Live Chart