Overview:- By analyzing the daily technical chart we can see that pair is trading and moving in an uptrend and in an uptrend market the corrections are considered as buying opportunity. Well the current picture depicts us that the correction is over now and it’s time to buy the gold once again. It’s an alternative opportunity to buy for those who have missed earlier. The short term to intermediate term trend is up and in an uptrend market always buy on dips will be profitable strategy.
The last week was a highly volatile week as we can see that initially bulls take the charge and took the price at $1611 level which was a psychological level and everyone has opened their long position. No one has anticipated that gold will reverse from these levels so badly and on the same day it reversed back and closed to $1554 level which engulfed too many stop losses of long positions. Well on the next day also we have seen bearish momentum and it tested the $1535 level where 9 EMA line is lying and after retesting the EMA line it managed and sustained above $1550 level once again.
Fundamental Analysis:- During the last week Gold prices held steady as investors remained concerned about existing tariff and unresolved issues after US and China signed the interim trade deal. US President Trump and Chinese vice Premier Liu He signed the phase one deal, reducing the 18 month noise between the world’s two largest economies. There are certain developments that are appreciated by the market although, few pain points still remains which continues to give support to the metal prices. China has agreed to buy more goods and services from the US according to the market considerations. US have also removed the tag of currency manipulator from China. US has agreed to remove the tariffs levied on China only after the phase two deal as US can use it as negotiating card. SPDR holding rose 0.43% to 878.32 tonnes on Wednesday.
On Monday, Spot gold prices ended marginally higher by 0.01 percent to close at $1565.9 per ounce. Easing of tensions arising from the Middle East coupled with the signing of the phase one the trade deal between US and China boosted the risk appetite amongst investors in turn denting the demand for the safe haven asset, gold.
President Donald Trump on Wednesday signed an initial trade deal with senior Chinese leaders that include pledges from Beijing to more than double its purchases from American farmers in the first year.
Under the agreement, China has promised to buy an additional $12.5 billion in US agricultural products in year one, and then $19.5 billion in year two. The pledges by China to buy more US farm products are part of a broader $200 billion package that includes manufactured goods and energy exports by 2021. The two sides estimate that those purchases will continue beyond the two-year deal into 2022 through 2025.
Technical Analysis: – From technical prospective we can see that a rounding bottom pattern has been completed easily and first phase of Bull Run is over now. Now it’s time to focus on the second run of Bull Run where $1700 level is the potential target. The MACD lines are providing us bullish signal line and RSI is also trading near 70, so some correction can’t be ruled out but that should be considered as buying opportunity. Both the indicators are generating bullish signal. Moreover, gold is getting moment just because of fundamental news.
The $1500 level is psychological level for bulls. Presently pair is trading above the moving average lines. Overall gold is trading in uptrend so we would suggest to buy on dips short term point of view. Odds are in favor of bulls and we will keep our bias bullish on the gold as long as $1500 level remains intact. The $1500 is the key support level followed by $1470 level whereas $1600 is key resistance level followed by $1640 level.
Trade idea:- Based on the chart and study above we are expecting that go for long at current levels 1560-1555 level for the target of $1600 and $1640 level with the tight stop loss of $1530 level.
