Gold’s weekly outlook: May 22-26

Gold rose nearly $30 in the last week over worries of political uncertainty surrounding U.S president Donald Trump’s election. Gold added incremental gains from start of the week as demand for the metal spurred due to uncertainty clouds. Gold rose from $1226 to a hit a high of $1265 where it found a resistance due to pattern completion of Head and Shoulders before settling at $1255 for the week. Gold steamed ahead breaking resistances as anticipated in the earlier week.

On the chart –

Gold was clearly in a bullish grip adding gains of about $30 in the week. Gold was expected to move higher which it complied to and gained more than predicted due to noise created by U.S over the election of Donald Trump. Circles on the chart depict the ranges in which gold is trading and where it can trade further in coming days/weeks. With North Korea testing another missile in the weekend we have 2 scenarios –

1. Gold had hit a wall at $1265 as it completed Head and Shoulders pattern and reversed from there. This also indicates lack of buying interest at higher levels as news flow was not that strong to keep the upward momentum going. With gold topping out it can have a fall towards its support at $1247 (A) which it tested twice in the previous week. If this support fails we can see a further downside towards $1224 (B) which is a fairly good reversal zone for the metal. If this zone fails to hold gold can slide further towards $1208 (C). In any circumstance, if this price point fails we can see the price falling towards $1198 (D) which is a massive support for the yellow metal but such a move is unlikely with the amount of worries world is facing at the moment.

2. Gold brushed off negativity surrounding its price and rallied nearly $30 which is seen as a positive for the metal. With the current momentum intact gold can move higher towards $1265 (1) where gold found resistance due to pattern completion. If we manage to break it gold is expected to move forward to $1282 (2) which is a fairly good resistance on the chart. If scenarios favor the yellow metal it can rally higher towards $1295 (3).

Bullish view – Bulls were on top of their game as prices steamed ahead breaking short term resistances. Bullish bets were clearly visible due to the price action. Bulls were able to defend $1247 twice which indicates strength the metal has on the upside. If this support holds, gold is expected to go higher towards new highs above $1265. Also fresh tensions in Korean Peninsula can aid the metal on the upside.

Bearish view – Bears were trapped as the prices rose incrementally from the crucial pivot area of $1228. Bears should be happy as the price was not allowed to run away in one direction and higher level attracted fresh shorts. If tensions over the U.S presidential election runs out of steam gold can see a fall towards the lows of $1224 as it is the only driving factor for the gold. Good data from U.S can also dampen the price of gold.

On larger terms, Gold is continuing to be neutral as fresh worries keeps the metal in check on either side not allowing a clear direction. Prices are expected to trade in the range as depicted by the circles in the chart and if any circle breaks it can move to the next circle or the next trading range. On side note current global worries suggest more upside rather than downside until its solved.

Possible trades are on both sides, Gold can be bought around $1247-1252 for targets of $1265 and $1282 with a stop loss placed below $1242. Longer term target $1295. If we do not see a fall gold can be bought above $1265 for the targets as mentioned above.
Similarly gold can be sold near $1244 for targets of $1235 and $1224 with a stop loss placed above $1247. Longer term target $1208 and $1198.

gold weekly 10

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s