Gold started the month on a backfoot with negative returns of $23 broadly on account of an intense risk-on rally across the globe which sent major indices to lifetime highs. With Impeachment resulting as expected, it further added to the downward pressure as yet another big political event smoothened out without creating much noise. Whereas the ongoing epidemic like conditions due to outbreak of coronavirus continues to haunt further as the death toll kept increasing with number of affected persons rising significantly which is the biggest fundamental support for the prices at the moment. Technicals remain in favor of bulls even after a week of correction. To watch this week –
Fed Chair Powell Testifies and other important economic data.
On the chart –
Gold had a down week after 2 good green candles due to a ferocious risk-on rally across the globe as fears/tensions eased which might suggest further consolidation before a fresh outburst. The price action continues to encourage buy on dips as the low remains protected. We have 2 scenarios –
1. Gold closed above the support, till this is held it can go to $1571. If this is crossed it can move towards $1581. And if this is taken out it can rally to $1597.
2. Short trades wont be of much use as the low/support holds except scalp trades.
Bullish view – Bulls took a breather as the price corrected but did not sit out as they pulled it back from the lows again clearly indicating the overall trend. Fundamentals have lessened the support for bulls as major events have folded with coronavirus remaining as the sole issue/fear while technicals suggest choppiness with bullish bias. For price to keep going higher it needs to defend the supports/lows.
Bearish bets still remain non-productive.
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 $1575 for the targets of $1581 and $1597 with a stop loss placed below $1560. Longer term target $1616.
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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