Bottom line: Gold long term structure might be turning bearish against $2075 resistance. The metal has been drifting sideways since last several trading sessions and need to break below $1862 lows to confirm a meaningful top in place.
Fundamental Outlook:
DAX had managed to print a 5 month high at 13450 over the last week. The indice had remained under pressure last week as risk aversion returned with vengeance but reversed sharply closing +2.0% higher yesterday, closing around 13100 mark. As focus turns on Euro Zone Q2 GDP figures to be out today, it remains to be seen if DAX is able to hold its gains.
Global indices might remain vulnerable for another round of selloff as SPX500, Dow Jones, FTSE recover after last week’s drop. SPX500 and Dow Jones might rally over the next few sessions as markets re-open today.
WTI Crude prices has extended its losses and trades below $39.00 mark as we prepare to publish. The commodity had dropped close to -4.45% on Friday after the US Jobs data was released. As most risk assets might extend their declines, US Dollar could be a beneficiary, going forward.
Technical Analysis:
Gold continues to drift sideways after having print $2075 highs on August 07, 2020. The triangle consolidation has been highlighted on the chart as the yellow metal might prepare to push towards $1955/60 levels before finding resistance again.
Gold faces strong resistance around $2000, followed by $2075, while support is seen around $1900, followed by $1862 respectively. A break below $1862 might confirm bears are back in control and a meaningful top is already in place. Alternately, a break above $2000 might warn another high above $2075 before reversing.
Most traders might prepare to initiate fresh short positions around resistance levels ($1960/2000), with protective stops above $2075 and projected targets below $1670 levels respectively.
Prepared by
Harsh Japee, Technical Analyst.
Gold Chart
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