Gold capped at $1238

Financial Mirror (Cyprus) - - FRONT PAGE -

By Jameel Ahmad

After break­ing through a bear­ish trend­line at the be­gin­ning of last week, Gold ben­e­fited from some USD profit-tak­ing and man­aged to climb its way back up the charts. How­ever, the yel­low metal found re­sis­tance at $1238 pre­vent­ing en­try to $1240 and cur­rent tech­ni­cals in­di­cate this could be a psy­cho­log­i­cal ceil­ing in the cur­rent Gold mar­ket. The $1238 level also rep­re­sents a 50.0 fib level from the pre­vi­ous high ($1344) to the pre­vi­ous low ($1131) and the metal find­ing re­sis­tance at the 50.0 fib level twice last week does sug­gest the Fi­bonacci lev­els are in play. If this is the case, tech­ni­cal traders would likely be bear­ish be­low $1238 and look­ing at a po­ten­tial en­try op­por­tu­nity if Gold man­ages to break through this re­sis­tance. The main down­side risk for the USD is the FOMC Decision, where any dovish com­ment on in­fla­tion ex­pec­ta­tions from the Fed­eral Re­serve would likely en­cour­age USD profit-tak­ing and in­spire bullish moves in Gold back to­wards $1238. So far, the Fed­eral Re­serve has been fairly quiet re­gard­ing the de­cline in oil prices but traders should watch out for any po­ten­tial dovish com­ments.

As long as USD de­mand re­mains con­sis­tent over the next one or two days, support lev­els for the metal can be found at $1204 and $1197. If the $1197 area breaks, fur­ther support can be found around $1190. It would re­quire an un­ex­pected hawk­ish com­ment to move Gold any lower than the psy­cho­log­i­cal $1180 level.”

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