Gold soared above $1220 levels last week as Fed struck a dovish tone after increasing the interest rate by quarter of a percentage point. Gold rose from the lows of $1196 which was a strong support for the metal to weekly high of $1231.4 before settling at $1229.8. This weekly close above the resistance of $1229 is regarded as very positive and incremental gains are possibly on the cards. The immediate upward movement of gold after the rate hike showed investor confidence over this safe haven which was missing from past weeks where the metal tumbled from highs of $1263 to a low of $1196.2. With Fed event out of the way the metal is poised to create new highs in coming days/weeks as global uncertainty never seems to subside.
On the chart-
Gold broke the trading range which it had entered in the week before which had raised the eyebrows over a possible breakdown of the yellow metal. Gold shot up in later half of the week closing above the resistance of $1229.
This move created a triangle formation on the chart with gold now having a support at $1224 (B) as suggested by intersection of ray lines, this support could be stronger than the $1220 mark. A positive closing indicates bullishness in the gold prices and confirms the 2nd leg of upward move in the metal has started as predicted in Gold’s weekly outlook: March 13-17. Gold prices are expected to hit the high of $1305 (A) where the metal might take a breather and consolidate before moving higher as it is a crucial level and a very good resistance on the chart. Such a move in the prices have created a downside protection at $1200 (C) confirmed by intersecting ray lines which will act as a good support and any violation may result in a breakdown towards $1196 then $1182, chances of such a move is very slim but cannot be fully ruled out.
On larger terms, technically gold remains in the bullish grip with the prices expected to move higher with the initial targets of $1245 and $1268 for short/medium term and a longer term target at $1305 in coming days/weeks, Gold now has a downside protection at $1200 and any conclusive breakdown may result in a price movement towards $1196 and $1182 levels.