Gold gained nearly $8 in a volatile week of trade which was engulfed with important events like outcome of U.S Fed meet. The Fed raised the interest rate along the expected lines which was fully baked in the gold price and thus it rose after the announcement. This hike was fully factored in the last week’s price action thus a rebound was on the cards but the relief rally was paused at the 50 day moving average. Such a close still indicates no fresh direction as the price remains in cautious territory since it was unable to cross the moving average. Thing to look out for next week is the crucial tax reform bill and its implications if it gets passed or held back.
On the chart –
Gold had a relief rally rising nearly $8 in a volatile environment but failed to sustain above the crucial moving averages. This possibly can be still seen as negative and such bounces can be sold into, alternatively if it manages to hold above the averages then retracement to $1300 can begin again. We have 2 scenarios –
1. Gold had a positive week after falling badly as the support at $1248 was respected. If the support holds then gold can be seen rising to $1272. If this resistance is crossed then gold can rally to the next resistance area at $1284.
2. Gold had a relief rally but was stopped from crossing the 50 day moving average on closing basis thus still indicating bearishness in the mood. If its not allowed to cross then gold can slide back towards $1248. If this is broken then it can fall further towards $1235 levels.
Bullish view – Bulls were on the winning ways after getting hit hard in the previous week. Respect of the support at $1248 might give motivation to the bulls to drive the prices even higher in the coming week but it will be under scrutiny with big fundamentals again as in tax reforms bill to be discussed next week. Only hope for the bulls is the crossing and sustaining above the 50 day moving average and if they succeed then we might see higher prices.
Bearish view – Bears took a breather after largely eroding the price in the previous week. They tried to continue the downward trend but failed as fundamentals aided the bulls. But they should be happy as prices were not able to cross the resistance of 50 and 100 day moving averages which might suggest the upmove was just a relief rally and downtrend can continue if the support at $1248 is broken.
On larger terms, Gold remains sideways and the prices are expected to move in the favor of the direction decided.
Possible trades are on both sides, Gold can be bought above $1265 for the targets of $1272 and $1284 with a stop loss placed below $1257.
Gold can be sold below $1254 for the targets of $1248 and $1235 with a stop loss placed above $1261.