Gold’s weekly outlook: July 06-10

Another 52 week closing high (weekly) for gold as pandemic continues to roil the globe with infections surging to record highs in various countries. The onslaught caused by the coronavirus still fails to truly show in the economy as the recent data suggests a miraculous turnaround from the lows that too at a never seen before pace whose gap from reality is just increasing where furloughs / jobcuts, closures and bankruptcies have become a fairly common sight. This mirage or denial mode points toward another forthcoming riskier asset class correction when the quarter numbers start trickling in or the worst might have been actually over but all depends over the thin line of statistics. All in all the pessimistic clouds have been shrouded by the free money euphoria which to a large extent could be just an election gig and reality should bite hard once the event is over. $1800 looks closer than ever as both fundamentals and technicals strongly favors higher prices. To watch next week – Inflation and other important economic data.

On the chart –

Gold continued its rally as it created another 52 week high on back of gloomier economic outlook and a falling dollar. The closing high suggests that there is still more scope on the upside with other global factors already buoying the price in full force. Chances are there that gold might find its true resistance near $1800 area as seen historically but its all the more bullish if it does and aims for inverse head and shoulders pattern which if charted through will catapult gold prices into another range. We have 2 scenarios –

1. Gold closed above the support, till this is held it can go to $1789. If this is crossed it can move towards $1804. And if this is taken out it can rally to $1823.

2. Short trades still remain colorless as trend remains overly bullish except scalp trades.

Bullish view – Bulls registered another high both 52 week and closing as the rush for safe haven continues amidst chaos and uncertainty caused by the pandemic. Fundamentals should remain in favor of bulls for a good amount of time till the virus weakens and things start getting back to normalcy but technically gold nears a crucial resistance zone which if taken out will propel it at an even higher pace. For bulls to keep on the unopposed run they need to take out the critical levels and hold the supports.

Bearish bets still remain out of context.

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 $1780 for the targets of $1789 and $1804 with a stop loss placed below $1771. Longer term target $1823.
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.