Bottom line: Gold might have carved a meaningful top around $1780 levels or could be very close to carving around $1790/95 respectively. A break below $1747 would confirm that a meaningful top is in place already.
Fundamental Outlook:
DAX had rallied close to 2.0% yesterday closing in around 12280 mark along with most Global Indices. Believe it or not, yesterday’s rally across risk-assets might be seen as a bull trap. COVID-19 infections have crossed over 10,400,000 and deaths over 500,000.
US in particular and the Asia-Pacific region has seen a dramatic rise in COVID-19 cases over the last few weeks. It could be just a matter of time before DAX along with Dow Jones, SPX500, NASDAQ, FTSE and others face another selloff.
WTI Crude has eased off its highs from $41.60 over the last week along with Brent Crude, which has slipped lower from $44.00 per barrel highs since June 23, 2020. Oil prices may feel renewed selling pressure as the world faces risk of another wave of COVID-19 infections.
Technical Analysis:
Gold has managed to print yet another high at $1780 mark over the last week. The yellow metal remains close to carving a formidable high around $1785/95, if it manages to break above the recent swing high. Traders might be willing to stay flat rather than initiate fresh long positions.
Gold has bounced off the trend line support on smaller time frame (1 hour) around $1720 levels. A break below $1720 and subsequently $1670 would confirm a meaningful top in place and that a reversal is on its way.
Gold is poised to reverse lower towards $1046 over the long term. Conservative traders might want to see a break below $1670 levels first. Thereafter they might be inclined to sell on rallies towards $1730/40 levels, going forward.
Prepared by
Harsh Japee, Technical Analyst.
Gold Chart
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