Gold ultimately closed (weekly) above $1800 broadly on account of an ever increasing safe haven demand due to persisting fears regarding global growth and a falling dollar. Coronavirus pandemic still remains the biggest cause of worry as it has led/leading to sizeable and unforeseen economic disruptions across the globe, even as few countries are trying to ease restrictions earlier imposed it is not helping much because on other hand the deeply affected ones are close to reimposing lockdowns again due to uncontrollable increase in infections. Mixed news regarding vaccine ain’t providing much relief either as it is actually creating more anxiety and confusion. Although recent economic data released is not showing the depth of pain this pandemic has cause, it might be thoughtful to assume that the worst is probably priced in which remains the only heartening factor if at all it is true. For gold, a close above $1800 is suffice to path the future trajectory irrelative of the fundamentals and the technicals though both strongly favor higher prices. To watch next week – Earnings season and other important economic data.
On the chart –
Gold at last closed above the psychological $1800 marking a fresh territorial advancement. This fresh 52 week high closing (weekly) certainly charts out the parabolic move ahead discarding all bearish scenarios. The price is trapped in a band which is likely to break on the upside, a possible gap up might be the initiator for the next move ahead. We have 2 scenarios –
1. Gold closed above the support, till this is held it can go to $1823. If this is crossed it can move towards $1839. And if this is taken out it can rally to $1857.
2. Bearish bets remain out of context after such a close.
Bullish view – Bulls comfortably reclaimed $1800 after nearly 9 years which itself is a big ordeal. This close opens up the next leg of upmove which should take the metal to all time highs and possibly even higher as global recovery would remain sluggish until the virus slows down. With $1815 posing a stiff resistance, it could be taken out with a gap up which would trap the meanest of the shorts prompting a ferocious short covering rally. Fundamentals and technicals remain supremely supportive with metal expected to create fresh highs.
The close itself is sufficient to suggest what remains in the offing for bears.
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 $1815 for the targets of $1823 and $1839 with a stop loss placed below $1804. Longer term target $1857. 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.
Your call and stop loss are correctly amazing. Gold and Bitcoin share the same aspects of volatility, they always go to hunt our stop loss :(. I observed that the Weekly close now is very important in this market. Thank you for your sharing and cheers.