Gold posted a gain of over $5 in yet another week of consolidation. This week was an inside one where there was no higher highs or lower lows. Next week is eventful with Fed’s rate decision which can break this range the market is stuck into as lack of events in past month have failed to give any direction to the metal. With gold respecting the support it can be seen as the event might prove bullish for the prices. Volatility may be increased in the next week owing to the speculation due to the event.
On the chart –
Gold once again got resistance at $1210-$1212 and fell back below $1200. But the taking point is it achieved gains in the week compared to losses it was posting from last 3 weeks and a close above the resistance of $1198. Still its clueless about the direction and a big move is required to ascertain it. We have 2 scenarios –
1. Gold’s closing above the support of $1198 suggests it can go higher. If this is held it can go to $1208. If this is crossed it can rally till $1217. And if this is taken out it can move towards $1228.
2. Short trades doesnt entice much as the support is held. They come into action once the support of $1185 is taken out for targets of $1162 and $1123.
Bullish view – Bulls kept on the pressure as they managed to close above the resistance at $1198. For bulls to keep their momentum going they need to defend $1185 which they have done successfully for past 1 month and try to create a new high.
Bearish view – Bears are modestly into the game as they are not allowing the price to close above the psychological $1200. For bearishness to bloom $1185 needs to be taken out.
On larger terms, Gold still remains sideways. Prices may remain rangebound to sideways until a direction is found.
Possible trades are on both sides, gold can be bought above $1201 for the targets of $1208 and $1217 with a stop loss placed below $1185. Longer term target $1228.
Short trades go live once $1185 breaches, if it does then it can be sold for the targets of $1162 and $1123.