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long on Gold
The upcoming holiday season, is most probably interfering with the precious metal normal trading course. The absence of liquidity caused by absent traders is somewhat reducing its strength in the direction it has formed in the past 2 months. We must acknowledge the fact that Gold traders have been obviously closing their buy positions as a trend that has been formed due to various reasons. First we are observing a dumping of safe havens, instruments investors usually turn to under periods of uncertainty or economic instability. Gold as well as the Swiss Franc both considered as safe havens, have been in a selling momentum for some time now, making the case for a significant portion of risk disappearing . A strong enough motive for this selling momentum to take place could be appointed to the latest positive developments coming from the US Sino trade talks. Even though the matter initially shook the economic global system spreading fear and uncertainty, both sides have now confirmed the talks are advancing in a positive manner and in the desired direction. The trade talks have moved from Beijing to Washington, an indication that
both sides are keeping a close eye on each other, and officials from both sides confirmed most of the issues has been resolved and the talks are on the next level. Many analysts and Gold followers believe the precious metal selling momentum was enacted and persists due to this
reason and they expect the selling to continue , with some seeing Gold dropping even lower, to the $1250 round number.
Others view Gold’s market reaction being assigned to various trends that arise on a yearly basis to even wider time frame. To be more specific the precious metal trading cycle may have started back in mid-August 2018 when prices reached a yearly low. Since then Gold prices advanced over
a 6 months period and added approximately 175 USD in value, reaching a 2019 high in mid February at $1345 per ounce. Analysts are in favor of the opinion that this cycle has already reached its peak and is now in the correction stage for the past 2 months shedding approximately
70 USD per value steadily. We somewhat agree with various analysts supporting this view, and we also believe the decline could continue even further unless other fundamentals intervene. However, the case of a steep drop could be far fetched as we believe while dropping, traders will
be buying the precious metal at strong levels making some fast profits and exiting thereafter. So we believe the drop could take place gradually in the next 3-4 weeks. We must also make reference to the significant strengthening of the USD during the past week.
The past days have been very positive for the Greenback and the opposite effect it has on Gold may have been intensified even further, due to this. The strength of the US dollar is also very evident on the Dollar Index which measures the strength of the currency against other major counterparts. The Dollar Index, is currently trading at a 1 month high, which has been previously reached once in March 2019 and once in February 2019 the only times the index peaked in the current year. Generally, in the recent weeks we have had positive signals from the US economy.
Furthermore, yesterday, data showing robust U.S. retail sales maintains the optimistic picture of the largest economy of the World. As long as the greenback maintains its bullish strength, the harder it could be for Gold bulls to engage effectively.
Technical Analysis
The precious metal is currently moving in a sideways momentum between the (R1) 1280.00 resistance level and the (S1) 1271.50 support level. If the precious metal is undertaken by a purchasing momentum we may see it move above the (R1) 1280.00 resistance level and even higher to the 1287.00 resistance line. The next price in an upward momentum could be the (R3) 1294.00 resistance line. In the opposite direction we may see the precious metal move towards the (S1) 1271.50 support line and breach it moving lower for the (S2) 1260.00 support level. Even
lower we could see the (S3) 1244.70 support line. In general the shiny metal remains in a bearish sentiment that may persist for the short term. However, for our view to change we would expect the precious metal to at least move towards the 1300 psychological threshold.
Please note that Gold prices are currently trading at a yearly low
both sides are keeping a close eye on each other, and officials from both sides confirmed most of the issues has been resolved and the talks are on the next level. Many analysts and Gold followers believe the precious metal selling momentum was enacted and persists due to this
reason and they expect the selling to continue , with some seeing Gold dropping even lower, to the $1250 round number.
Others view Gold’s market reaction being assigned to various trends that arise on a yearly basis to even wider time frame. To be more specific the precious metal trading cycle may have started back in mid-August 2018 when prices reached a yearly low. Since then Gold prices advanced over
a 6 months period and added approximately 175 USD in value, reaching a 2019 high in mid February at $1345 per ounce. Analysts are in favor of the opinion that this cycle has already reached its peak and is now in the correction stage for the past 2 months shedding approximately
70 USD per value steadily. We somewhat agree with various analysts supporting this view, and we also believe the decline could continue even further unless other fundamentals intervene. However, the case of a steep drop could be far fetched as we believe while dropping, traders will
be buying the precious metal at strong levels making some fast profits and exiting thereafter. So we believe the drop could take place gradually in the next 3-4 weeks. We must also make reference to the significant strengthening of the USD during the past week.
The past days have been very positive for the Greenback and the opposite effect it has on Gold may have been intensified even further, due to this. The strength of the US dollar is also very evident on the Dollar Index which measures the strength of the currency against other major counterparts. The Dollar Index, is currently trading at a 1 month high, which has been previously reached once in March 2019 and once in February 2019 the only times the index peaked in the current year. Generally, in the recent weeks we have had positive signals from the US economy.
Furthermore, yesterday, data showing robust U.S. retail sales maintains the optimistic picture of the largest economy of the World. As long as the greenback maintains its bullish strength, the harder it could be for Gold bulls to engage effectively.
Technical Analysis
The precious metal is currently moving in a sideways momentum between the (R1) 1280.00 resistance level and the (S1) 1271.50 support level. If the precious metal is undertaken by a purchasing momentum we may see it move above the (R1) 1280.00 resistance level and even higher to the 1287.00 resistance line. The next price in an upward momentum could be the (R3) 1294.00 resistance line. In the opposite direction we may see the precious metal move towards the (S1) 1271.50 support line and breach it moving lower for the (S2) 1260.00 support level. Even
lower we could see the (S3) 1244.70 support line. In general the shiny metal remains in a bearish sentiment that may persist for the short term. However, for our view to change we would expect the precious metal to at least move towards the 1300 psychological threshold.
Please note that Gold prices are currently trading at a yearly low
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