Gold resumed its uptrend after a week of consolidation as it gained $14 to make a new closing high on the weekly timeframe . Chunk of the gains came from yet another fresh fear of a possible outbreak of an epidemic (caused by coronavirus) in China which could spillover worldwide, an event compared to the 2003 SARS virus case which also had the epicenter in China. The ongoing Impeachment hearings in the U.S added to the delight of the bulls as uncertainty forced minor risk off. Fundamentals are largely in favor of the bulls while technicals are steady keeping the trend intact. To watch this week – Fed meeting, Bank of England meeting, GDP figures and other important economic data.
On the chart –
Gold climbed higher majorly on fears of an epidemic as coronavirus kept the death toll active with cases spreading worldwide making another bullish candle after a minor consolidation. Fundamentally gold is looking stronger and stronger on weekly basis as the risks are constantly renewing (they never seem to stay put) pulling the technicals along which have turned bullish again after a little break. We have 2 scenarios –
1. Gold closed above the support, till this is held it can go to $1581. If this is crossed it can move towards $1597. And if this is taken out it can rally to $1616.
2. Short trades remain unattractive in a bullish environment except scalp trades.
Bullish view – Bulls had good week as they managed to have a new closing high on weekly timeframe shoving off bears again broadly on account of renewed fears and risks of a possible epidemic outbreak. With Fed meeting on the horizon, renewed risks should keep the tone dovish which will be another impetus to the bulls. Fundamentals continue to provide solid support to the bulls while technicals have turned bullish again giving an extra push keeping the trend strong and long.
Bearishness remains off the table.
On larger terms, Gold continues to remain bullish and prices are expected to head higher.
Possible trades are on both sides but mainly on upside, gold can be bought above $1575 for the targets of $1581 and $1597 with a stop loss placed below $1560. Longer term target $1616.
Dips towards support (and breakout region) can be used to create longs for the above mentioned targets.
Shorts can be useful for scalp trades only.
Reference: Trading View
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