Bottom line: Gold long term structure still remains vulnerable for a decline towards $1450 and beyond. Bulls need to break above $1765 to be back in control. The metal is seen to be carving lower lows and lower highs as traders prepare to break below $1660.
Fundamental Outlook:
DAX continued its rally yesterday closing it at 12922 (futures), the highest since February 24, 2020. The German Index rose over +1.2%, along with SPX500 (+1.2%) and Dow Jones (+1.75%). The 13 week rally has been defying the Economic Damage caused by COVID-19 pandemic and investors are now beginning to believe that the worst is behind.
Markets will now look forward to the Fed meeting to be held tomorrow. R=Interest rates are set to remain on the lower side 0.25% and much of that is already priced in. Having said that, we would warn here to be over optimistic on the hopes of a V-Shaped economic recovery globally.
Gold had drop on Friday to $1671 after the NFP was released. It came in as a surprise as the US adder over 2.5 million jobs in May against the projected loss of over around 8 million. It remains to be seen how Gold prices react to the Fed meet tomorrow as the yellow metals remains vulnerable to break below $1660.
Technical Analysis:
Gold continues to remain in control of bears as they print lower lows and lower highs since $1765 levels. The metal remains vulnerable for a sharp decline towards $1650/60 intermediary support. This would also confirm that Gold has carved a meaningful top at $1765 and the next big move should be lower.
Gold structure remains bearish since 2011 highs at $1920 levels. It needs to print below $1046 lows (December 2015), to complete the 3 wave corrective drop. Thereafter bulls could be back in control and push higher again.
Aggressive traders might be willing to sell or add more, around current price ($1697) with protective stops above $1765 levels. The projected targets could be $1660, $1450 and further, over the long term.
Prepared by
Harsh Japee, Technical Analyst.
Gold Chart
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