Gold remained in a sell mode even after 8 weeks of downfall creating a fresh yearly low on closing basis. A higher dollar was the culprit this week not allowing the metal to go higher even in global turmoil situations such as sanctions being imposed on Turkey and Russia. Though gold defended $1205 again this week suggesting there maybe a possibility that the metal might have formed a short term bottom but trend largely remains bearish and mostly all rallies will be used to sell into till gold actually breaks above its resistance at $1243.
On the chart –
Gold remained in the red though cuts were less than the previous week. With fundamentals pointing towards higher gold price, this is only helping to curtail the losses per week as the rising dollar is negating all positivity. Key level to watch for further downside is $1205 as once broken it will open up the gate for further fall, till then gold might consolidate with some relief rallies. We have 2 scenarios –
1. For the second week gold defended $1205 and retraced back which might be suggesting a possible short term bottom being formed. Until this is held gold might see some green and can climb towards its resistance area at $1243.
2. Gold continued to post negative returns and formed a lower high. If this trend remains it can fall towards $1208. If this is broken it can test $1198. If this support area gives way it can slide till $1185.
There is no bullish view as support remains broken. Only factor which may help – $1205 is held for 2nd consecutive week and if it continues to hold then rally towards the resistance at $1243 cannot be ruled out.
Bearish view – Gold is creating a fresh yearly low every week on closing basis which is clearly a bearish sign as bulls are losing ground every week. Bears are aided by a strong dollar which should continue to pressure the gold prices on the downside or atleast limit the upside. Technically gold remains in the hand of bears who are getting powerful every passing week as gold is unable to attract fresh money even at lower levels. With the given trend once $1205 is broken then bears can have a feast till $1180s.
On larger terms, Gold continues to remain bearish with prices expected to trend lower.
Possible trades are on both sides, but largely on short side, gold can be sold below $1217 for the targets of $1208 and $1198 with a stop loss placed above $1237. Longer term target $1185.
There are no long trades until the price takes support which it did at $1205 creating a short term bottom and till this is held rallies toward $1243 stay on the table.