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Gold remained in consolidation/range with week’s candle mostly mirroring the previous two with the exception of the body of the candle which didn’t match as the actual movement was less than $2. Gold managed to have a closing above $1900 again simply suggesting the tone of the market which by all means remains bullish as uncertainty is near the highest level with U.S elections knocking at the door along with the pandemic unleashing a strong 2nd wave forcing countries to rethink total lockdown again due to massive jump in fresh cases. Actual situation might not be what it is being projected through the stock market and the economic data which may well turn out to be just an election gig or alas the famous old saying “money never sleeps” should kick in supporting the upmove since the fatal crash in March. On vaccine front, mixed signals everywhere with few countries rolling out their vaccines and others waiting for the FDA approved one which will definitely be a very tough ask. To watch next week – Earnings, stimulus talks and other important economic data.
Gold made a repetitive move again demonstrating the lack of direction before any big event as it always is the case. It might look worn out on the upside but this could be the way to shake off retail positions before a directive move. Technically gold still remains in the breakout as the pattern supports are being held quite smartly as is the 20 day moving average. We have 2 scenarios –
1. Gold closed above the support, till this is held it can go to $1921. If this is crossed it can move towards $1945. And if this is taken out it can rally to $1963.
2. Bearish bets remain absent in such a scenario.
Bullish view – Bulls reclaimed $1900 again on account of a falling dollar and sharp rise in uncertainty owing to upcoming U.S presidential elections and surging virus cases across the globe as 2nd wave of the pandemic takes the center stage denting economic recovery if any. Moreover the lull in gold price should not be mistaken for an exhaustion as it simply awaits a direction which should likely happen post Nov 3 event and the move is expected on the upside given the safe haven aspect and a perceived breakdown in dollar. Technicals might not be that supportive/conclusive at the moment but fundamentals remain strongly in favor of bulls with the price expected to make fresh highs till supports are held.
Bearishness continues to remain out of context.
On larger terms, gold remains bullish and prices are expected to head higher.
Possible trades are on both sides but mainly on upside, gold can be bought above $1915 for the targets of $1921 and $1945 with a stop loss placed below $1904. Longer term target $1963.
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