Bottom line: Gold might have carved a meaningful top at $1765 levels but it can be confirmed on a break below $1660. The metal pushed through resistance around $1743/44 yesterday, before pulling lower again.
Fundamental Outlook:
DAX continued to rally yesterday and managed to close higher by over +2.20% above 11900 levels. Its counterparts SPX500 and Dow Jones managed to post moderate gains of +0.30% after slipping into the negative during early hours.
Risk sentiment continues to surprise investors as focus still remains on COVID-19 after effects on Global Economies as they re-open, US-China tensions and the Brexit. The ongoing protests over killing of George Floyd in police custody shall also be closely watched.
WTI Crude rally continued yesterday and it gained over a +1.0%, closing above $35.50. Brent Crude also managed to close higher at $38.66, up over +2.3%. The production output cuts in May 2020 might be extended further in the next OPEC+ meet.
Technical Analysis:
Gold might be preparing to drop towards $1660 and further after reversing lower from $1743/44 mark yesterday. High probability remains for a bearish reversal ahead but we need to see prices break below $1660 to confirm. Aggressive traders might be preparing to initiate short positions against $1765, while more conservative traders might want to sell on rallies after $1660 breaks.
Gold had earlier dropped from $1765 through $1694, almost testing immediate support at $1691/92. The recent pullback rally gained momentum and reached fibonacci 0.618 retracement of earlier drop, around $1743/44. High probability remains for a bearish reversal around current price action.
Immediate resistance is seen towards $1765, while support remains intact around the $1660 mark. A bearish reversal would drag prices lower toward $1660 and $1570 mark in the short term. Ideally, Gold should stay below $1765, going forward.
Prepared by
Harsh Japee, Technical Analyst.
Gold Chart
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