Gold continued its uphill march as it claimed $1500 on closing basis rising $16 in another big ranged week owing to falling bond yields and broad sell-off in riskier asset class triggered by inversion of yield curve after a decade pointing towards an imminent recession. The week also saw one of the biggest and fastest intraday decline of over $50 as sentiments encircling U.S-China trade war improved as imposition of some tariffs got delayed by 90 days fueling a relief rally across all asset classes except precious ones. A close above previous week’s high continues to showcase the strength of ongoing bullishness. To watch in the week – Fed and ECB meeting minutes, Jackson Hole Symposium and other important economic data.
On the chart –
Gold moved higher above $1500 comfortably dicing through the resistances which had already weakened last week on fears of an imminent recession courtesy inverted yield curve and economic slowdown caused by multiple fundamental factors. Though gold may find itself in a bit of trouble as there are signs of a truce in the ongoing trade war between U.S and China as well as bond yields looks to have bottomed out which may not allow an easy movement on upside but the trend remains extremely bullish given the breakouts happening on the upside. We have 2 scenarios –
1. Gold closed above the support, till its held it can move to $1527. If this is crossed it can rally till $1541. Once this is taken out it can move higher to $1554 and $1565.
2. Short trades still remain unattractive given the breakouts happening on the upside except scalp trades.
Bullish view – Bulls conquered $1500 with substantial ease as they were assisted by a sharp fall in riskier assets due to an inverted yield curve which points towards an imminent recession boosting safe haven demand across the globe. This inversion has led to a near certainty of further rate cuts by the U.S Fed which is another booster for gold prices. Fundamental and technical factors continue to support higher gold prices with $1800 looking achievable in lesser time than expected.
Bearish bets remain off the table in the given scenario.
On larger terms, Gold continues to remain bullish and prices are expected to head higher.
Possible trades are on both sides but mainly on upside, gold can be bought above $1520 for the targets of $1527 and $1541 with a stop loss placed below $1508. Longer term target $1554 and $1565.
Dips towards support (and breakout region) can be used to create longs for the above mentioned targets.
Shorts can be useful for scalp trades only.
Reference: Trading View
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