Gold reversed all the last week’s loss as it formed a large green candle closing rather too comfortably over $1700 on account of fears regarding 2nd wave of infections and a very slow path of economic recovery. This was bound to happen as the gap between reality and euphoria was outstretched forcing some sanity back into the financial markets as the riskier asset classes took a hit while the risk free gained back lost ground. It does seem the fear of 2nd wave of infections are getting real as China is seeing a rise in fresh cases prompting it for a partial lockdown again which should definitely show up in the economy. Its not only China as Japan and the U.S are also seeing fresh surge in cases. Situations around the globe are just getting worse with the pandemic at full force and continuing geopolitical tensions pointing towards a long fight ahead for economic survival. To watch next week – Powell’s testimony and other important economic data.
On the chart –
Gold zoomed back above $1700 after a week’s blip as fears of a 2nd wave of infections took the center stage. The green bar created totally negated the big red candle adding to the bullish bias. Fundamentals turned in favor of bulls again while technically the bounce from the support area suggests a likely bottom. We have 2 scenarios –
1. Gold closed above the support, till this is held it can go to $1740. If this is crossed it can move towards $1755. And if this is taken out it can rally to $1771.
2. Short trades look bleak again as the metal closed above the support except scalp trades.
Bullish view – Bulls came roaring back as they reconquered $1700 convincingly as well as negated the full red bar created last week cautioning over shorting the yellow metal at dire times like the current situation. The bounce back from the support was fueled by growing fears over an imminent 2nd wave of infections which can rout the economic recovery forcing the world into a lockdown again. Passing of days are just aggravating the economic fallout as vaccines under development have no certainty while the pandemic continues to grow which is expected to affect 60-80% of the population worldwide before it ends. As mentioned earlier these provide a great recipe for gold to keep hitting highs in days ahead as it remains the only asset class with no negative impact from the virus.
Bearishness remains negligible as the bullishness prevails.
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 $1740 for the targets of $1755 and $1771 with a stop loss placed below $1729. Longer term target $1789.
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.
On the chart –
Gold zoomed back above $1700 after a week’s blip as fears of a 2nd wave of infections took the center stage. The green bar created totally negated the big red candle adding to the bullish bias. Fundamentals turned in favor of bulls again while technically the bounce from the support area suggests a likely bottom. We have 2 scenarios –
1. Gold closed above the support, till this is held it can go to $1740. If this is crossed it can move towards $1755. And if this is taken out it can rally to $1771.
2. Short trades look bleak again as the metal closed above the support except scalp trades.
Bullish view – Bulls came roaring back as they reconquered $1700 convincingly as well as negated the full red bar created last week cautioning over shorting the yellow metal at dire times like the current situation. The bounce back from the support was fueled by growing fears over an imminent 2nd wave of infections which can rout the economic recovery forcing the world into a lockdown again. Passing of days are just aggravating the economic fallout as vaccines under development have no certainty while the pandemic continues to grow which is expected to affect 60-80% of the population worldwide before it ends. As mentioned earlier these provide a great recipe for gold to keep hitting highs in days ahead as it remains the only asset class with no negative impact from the virus.
Bearishness remains negligible as the bullishness prevails.
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 $1740 for the targets of $1755 and $1771 with a stop loss placed below $1729. Longer term target $1789.
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.
Trade active