Bottom line: Gold medium to long term structure might be turning bearish against $2075 potential top. It cannot be projected with certainty at this moment, buy probabilities remain high for Gold to have either topped or very close to a top. Looking lower from here, going forward.
Fundamental Outlook:
DAX had dropped yesterday alongside global indices and closed at 12945, down -0.67%. As we enter a historically volatile month of September, Dow Jones and SPX500 also closed lower by -0.86% and -0.37% respectively. A swift recovery by the safe haven US Dollar as we enter September, might trigger risk aversion. Investors might remain cautious, over the next few weeks.
WTI Crude has managed to hit $43.75 levels, highest since April lows. The commodity has managed to produce an unprecedented rally since $0.01 historic lows in April 2020 over OPEC production cuts in recent weeks and optimism in demand after lockdown phase.
Gold has inched higher again towards $1990.00 levels today. The yellow metal had mostly remained subdues in a range since the all-time highs around $2075 on August 07, 2020. It might lose further ground if safe haven US Dollar inched higher from here.
Technical Analysis:
Gold has been consolidating since the last three weeks, after hitting $2075 high on August 07, 2020. The yellow metal had produced an engulfing bearish candlestick pattern on the weekly chart and dropped through $1862 lows the week after.
Gold has remained in control of bulls since $1262 lows in May 2019. Bulls have managed to produce a religious uptrend through $2075 highs. The metal has been consolidating since then and we do not rule out the possibility of yet another high before resuming lower.
Gold had tested the fibonacci 0.618 retracement of its recent drop between $2075 and $1862, seen around $2015 mark. The metal could re-test before hitting resistance again as most traders remain inclined to sell on rallies with a protective stop just above $2075, going further.
Prepared by
Harsh Japee, Technical Analyst.
Gold Chart
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