Gold price is in a strengthening bear market as it fails to make any move up regardless of factors which aid higher prices as selling is seen at higher levels and lack of demand even at lower levels seem to keep the momentum on the downside. Gold continued to form lower highs-lower lows pattern but both the extremes got rejected and it closed with cuts of less than $10. Metal is facing the heat from the sellers as every spike is getting sold into. Even fundamentals supportive of gold failed to make any decisive positive impact on the prices.
On the chart –
Gold price is in a bear territory where every rise is getting sold into and new lows are being created every week. Such a trend is being followed ever since it broke the crucial support at $1295. This week, being not only bearish minded gold took support at $1205 which earlier acted as a good support and if this is held we might see some short term relief rally as the overall trend remains bearish . We have 2 scenarios –
1. Gold took support at $1205 and bounced higher which had earlier too acted as a good support. If this is held we can see some rally on the upside restricted to $1243 as the metal is largely oversold.
2. Gold’s trend remains intact and it made a new low on closing basis breaking the support of $1217. Since this is breached it can fall towards $1208. If this is broken it can slide till $1198. And if this crucial support gives way it can fall further to $1185 and even lower.
Bullish View – “NO”
There is no bullish view as the support remains broken. Only thing to take note is the level of $1205, if this holds then a relief rally cannot be ruled out.
Bearish View – “POWERFUL”
Bearish view – Bears are becoming powerful every passing week as the metal is losing its luster even at lower prices. Bears are on the prowl for 8 weeks now and this may continue even further as factors aiding gold prices on the higher side is also failing in this unforgiving bear market. With this trend a breach of $1200 is highly likely and if its achieved then gold can have a nasty ride much lower towards $1180s.
On larger terms, Gold remains in a firm bear grip with prices expected to trend lower.
Possible trades are on both sides, but largely on short side, gold can be sold below $1217 for the targets of $1208 and $1198 with a stop loss placed above $1237. Longer term target $1185.
There are no long trades until the price takes support, though a relief rally cannot be ruled out if $1205 is held.
Reference: Trading View
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