In the chart –
Gold fell back much lower to retest the bottom made at $1261. It closed significantly higher mirroring the move it made 2 weeks before. Such a bounce back from lows again suggests the yellow metal might be close to bottoming out or has bottomed out. Though gold is still split between the 2 parties but bullishness is creeping in the sight. We have 2 scenarios –
1. Gold’s recovery from lows suggests prices are finding buying at lower levels and are not ready to collapse yet. If this trend continues gold can head higher to $1284 once the support at $1271 is held upon. And if the prices takeout this resistance it can even climb higher to $1297 which is a strong decisive point on the chart.
2. Gold continued its downtrend and added to the losses after rejecting the resistance at $1280s. If this is to be followed gold can fall to test $1261 yet again. If this support is breached on the 3rd attempt gold can further slide to the supports at $1248.
view – Bulls were out of the picture but made their mark as they helped the prices go higher above the support at $1271 on the closing basis from the lows of $1261s. This was a mirrored move and suggests a tone in the prices going ahead. For the prices to rise the support must hold.
view – Bears kept eroding the price to the lows of $1262s but failed to close below the support at $1271. This was a 2nd failed attempt which suggests their run might be coming to an end. To keep the bearishness intact price must break the support at $1261-$1263 which will open up further lows.
On larger terms, Gold remains sideways with a mild positive bias. Prices are expected to be range bound unless a direction is decided.
Possible trades are on both sides, Gold can be bought above $1278 for the targets of $1284 and $1297 with a stop loss placed below $1268.
Gold can be sold below $1268 for the targets of $1261 and $1248 with a stop loss placed above $1278.