In the aftermath of Chairman Powell's dovish speech last Friday, gold has seen a notable pullback from its recent highs. The market's anticipation of a less aggressive monetary policy has led to a softened stance on the U.S. dollar, affecting commodities inversely.
Technical Analysis:
Gold's rally was halted, and prices sharply declined after testing the $2040 resistance. The correction has been significant, breaking past the supporting trend line that has held since the $1960 base, and it retested it which is bringing worry to bulls. The metal is currently hovering around $2018, seeking stability. Also, the price is currently moving in the lower band of Bollinger Bands which is further confirming the bearish turnaround. The next session's focus will be on whether gold can maintain the $2010 support. If this level fails, the next key support is at $1990, below which the $1980 region could be targeted. Conversely, a rebound from current levels may retest the breached trend line, now acting as resistance.
Positioning:
Our strategy will have to shift to the short side if gold fails to regain its footing above the trend line. Although the correction seems drastic and sudden, the probability is still high for gold to move further up.
Technical Analysis:
Gold's rally was halted, and prices sharply declined after testing the $2040 resistance. The correction has been significant, breaking past the supporting trend line that has held since the $1960 base, and it retested it which is bringing worry to bulls. The metal is currently hovering around $2018, seeking stability. Also, the price is currently moving in the lower band of Bollinger Bands which is further confirming the bearish turnaround. The next session's focus will be on whether gold can maintain the $2010 support. If this level fails, the next key support is at $1990, below which the $1980 region could be targeted. Conversely, a rebound from current levels may retest the breached trend line, now acting as resistance.
Positioning:
Our strategy will have to shift to the short side if gold fails to regain its footing above the trend line. Although the correction seems drastic and sudden, the probability is still high for gold to move further up.