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Gold remained in consolidation even after the breakout as a fresh wave of profit booking ensued across all asset classes in the last 2 days of the week which can be again termed as flushing of retailer bets since the fall was limited to the retest of previous high/breakout. This agonizing movement of gold which is clearly saddled between the support and resistance does not offer much of composure in either camp as bets are getting restless and indeed once the consolidation gets broken it would lead to a quite large directional move which ideally should be on the upside since its already having a bullish breakout along with fundamental support comprising mainly of a weaker dollar. The Fed Chair Powell again reiterated the easing stance and signaled lower rates till the situation improves which is an unlikely scenario in short – medium term as the damage done/being done by the pandemic is severe and would require substantial amount of time to get economic order back to normal. On the positive side, again the vaccine news is doing rounds with countries claiming to use them for general masses as they seem satisfied by the trial but again none of the said vaccines have got a FDA clearance which makes them an uncertainty. For gold both situations are a win win as uncertainty remains at large in either which should keep the trend intact. To watch next week – ECB meeting and other important economic data.

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Gold had a red week of consolidation but nothing changed on the technical front rather trend got even more confirmed as the supports got tested again. Gold remains in an uptrend with breakouts being revisited only to get more credible as the dollar remains weak and in downtrend which shall be the likely scenario going forward as well since the money printing is in no sight of being paused or stopped. We have 2 scenarios –

1. Gold closed above the support, till this is held it can go to $1945. If this is crossed it can move towards $1963. And if this is taken out it can rally to $1989.

2. Short trades remain baseless except scalp trades.

Bullish view – Bulls had another hostile week as the price moved between the support and the resistance with no clear direction even after having a breakout in the week before. This actually is a favorable move for bulls since the trend is getting intense by every successful retest and the price is expected to flare up once the range gets broken. This sums up the technical part, coming to fundamentals the concerning factors continues to persist with pandemic not shying away from scaling up (turning into 2nd wave) and geopolitical tensions remaining escalated, it still doesn’t offer any kind of respite acting as a positive catalyst for gold . Price remains on track for new highs and the pattern target of $2700 plus.

Bearishness still fails to entice.

On larger terms, Gold remains bullish and prices are expected to head higher.

Possible trades are on both sides but mainly on upside, gold can be bought above $1936 for the targets of $1945 and $1963 with a stop loss placed below $1924. Longer term target $1989.

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