Gold was volatile in a range last week ending with minor cuts of half a percentage. Gold had opened higher but failed to keep the upward momentum before slackening towards sub 1270 and finally closing at the mid 1280 levels. Week went by can still be termed as a neutral for gold as no major directive moves had been noticed. Next week is a very eventful week as it has French elections to deal with along with the lingering geo-political tensions. Another volatile week expected for gold with big moves anticipated on either sides. Maybe most of the event might be priced into but spikes cannot be ruled out.
On the chart –
Gold fell $7 for the week to close at the support of $1284 after testing the top which can be a treated as a slightly bullish remark since gold went lower twice towards $1275-78 levels but failed to sustain there. Another uncertain week expected due to French elections for the gold so there are again 2 scenarios for the yellow metal –
1. Gold topped out according to the chart which is in a way a bearish sign as selling was clearly visible at such high levels entwined with lack of news flow regarding the tensions which was propelling the metal. Gold is at a very crucial point of $1284 (A) which if breached conclusively can result in a slump towards $1258 (B) zones which is a fairly good support for the metal now. If this area is taken out we can see more price action towards the $1244 (C) levels. Now if this level fails to hold we can see a drop towards $1218 (D) which is a very big support for the metal and such a move is very unlikely in the given circumstances with a reversal expected from $1229 levels if it falls so drastically.
2. Gold closed at the support of $1284 (1) which is a slightly good sign for the bulls since gold moved higher from the lows of $1275-78 twice before closing above the support area. If this area holds we can see more upward momentum towards $1303 (2) as uncertainty still looms favoring bullish bets. If this price point is crossed on a conclusive basis we can see a move towards $1330 (3) which is relatively far off but cannot be ruled out in an uncertain situation.
Bullish view – Bulls should be happy to take anything above $1284 as its a crucial pivot point for the directive move and they(bulls) have this in their favor. With French elections to kick-start next week, it adds another uncertain event to the continuing Korean peninsula tensions which seems to make a stronger point for the bulls in the coming week. Gold took support at $1278 levels indicating a floor might be in the making at $1270 levels. Prices are expected to rise amidst such uncertainties and important events.
Bearish view – Bears were on the top as Gold was unable to cross the $1298 making a top for the short term. Gold’s reversal from the top suggested selling pressure at higher levels making the bears more comfortable and aggressive as they eroded the price towards mid $1270 levels. If events dont go as predicted and tensions subside, a slide is widely anticipated towards $1258 levels.
On larger terms, Gold is still in uncertain waters with a neutral to slightly bullish bias. Prices are expected to be volatile and big moves are anticipated on either sides, preferably higher side taking into account the heightened level of uncertainty due to an additional event.
Possible trades are on both sides, Gold can be sold at higher levels for targets of $1278 and $1258 with a stop loss placed above $1303. Longer term target at $1244 and $1218
Gold can be bought around $1285 for targets of $1298 and $1303 with a stop loss placed below $1275. Longer term target at $1330.