Gold fell over $5 in the last week after hitting fresh 4 month highs as it completed the technical pattern of Head and Shoulder on weekly timeframe which was on expected lines. Such a pullback was purely technical in nature as the demand for gold is increasing as equities are getting riskier day by day. Geo political tensions also continue to back the yellow metal prices. Gold took support at $1331 and if it holds it can again head higher. A major factor affecting gold prices will be the reciprocation of U.S government shutdown which started from Saturday.
On the charts –
Gold created a fresh 4 month high before retreating to test the support in $1320s finally closing above the crucial mark of $1331. Such a swing tested both the support and the resistance. Political instability within America itself will be a guide for the gold prices. We have 2 scenarios –
1. Gold managed to close above the support of $1331 which if holds can restart the upward journey back to the highs of $1345. If this is crossed gold can head higher to $1362. If the 52 week high is conquered it can climb towards $1374.
2. There are yet again no short trades unless supports get breached.
Bullish view – Bulls registered a fresh 4 month high creating a higher highs and higher lows formation on the chart. The bullishness was kept on track as the price closed above the support of $1331 along with a political development of a U.S government shutdown which should propel the prices back higher. Bulls have a lot on their side to claim the title for the sentiment. If things unfold as they were feared of, gold can head higher to its 52 week high and beyond.
There is no bearish view as supports are continuously held upon.
On larger terms, gold remains in the grip of bulls with the prices expected to head higher.
Possible trades are on both sides but largely on long side, gold can be bought above $1341 for the targets of $1345 and $1362 with a stop loss placed below $1317. Longer term target $1374.
There are no short trades unless $1317 breaks, and if it does still its limited to $1308.