Bottom line: Gold trades around $2000 levels for now, after hitting fresh highs around $2075 mark over the last week. The yellow metal might have carved a meaningful top and is ideally expected to stay below that, going forward. Immediate support is seen through $1940/50 mark.
Fundamental Outlook:
DAX had remained almost flat yesterday closing around 12687 mark. DAX futures trading higher today around 12830, as we prepare to publish. DAX might come under pressure again amidst rising COVID-19 infections in many European Countries including Germany, France and Belgium.
Global Equity markets continue to remain fragile as US-China tensions continue to rise with each passing day. China announced yesterday that it would sanction select American Officials in retaliation to the US sanctions over the last week. Investor sentiment might quickly reverse, triggering a massive risk aversion, if there is no clarity on further stimulus package over extending unemployment benefits.
Gold prices hit fresh highs at $2075 last week before pulling back. The yellow metal has been under pressure with potential profit bookings seen, as it trades around $2000 mark for now. WTI Crude trades just over the $42.00 mark and might come under further selling pressure over COVID-19 fears.
Technical Analysis:
Gold might have carved a meaningful top around $2075 levels last week. The yellow metal trades close to $2000 levels for now and is expected to continue lower as bears are looking poised to be back in control. A break below $1940/50 support would confirm a top is in place.
Gold has produced an Engulfing Bearish candlestick pattern on the daily chart after hitting $2075 and is on its way to carving a potential bearish signal on the weekly chart as well. A close below $1975 would confirm, and the next big wave might be lower.
Gold has been in a religious up trend since $1262 lows and the yellow metal might be preparing to reverse lower again. An impulse drop from $2075 highs would be required to confirm that Gold has finally carved a meaningful top. It might be safe to consider selling on rallies thereafter.
Most traders might be waiting for prices to break below $1940/50 levels. They might be inclined to sell on counter trend rallies thereafter, with a protective stop above $2075 levels. Target potential remains around $1670 levels over the next several weeks to come.
Prepared by
Harsh Japee, Technical Analyst.
Gold Chart
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