Gold bulls still have work to do
Fawad Razaqzada July 20, 2018 5:49 PM
I think yesterday’s reversal marks the end of the short-term bearish trend for gold. I am not sure however if it has changed the longer-term outlook yet.
Yesterday in my silver report, I highlighted several reasons why precious metals could rebound. What I hadn’t expected was those comments from Donald Trump, which weighed on the dollar and underpinned buck-denominated precious metals. While I don’t see how the US President could keep the dollar low just by jawboning it, the greenback has weakened for the time being. Bullish dollar market participants may have used his remarks on interest rates and the exchange rates as a perfect excuse to trim their long positions. Dollar could be hit by further profit-taking next week particularly since we won’t have any significantly important US data until Friday, when GDP is released.
What does it all mean for gold? Well I think yesterday’s reversal marks the end of the short-term bearish trend for gold. I am not sure however if it has changed the longer-term outlook yet. I think it is a dollar move, but if stocks were to also melt down in the coming week then precious metals could sharply extend their gains on safe haven flows.
But we are focused on the short-term and see potential resistance at $1236, a level which was support in the past. However if gold doesn’t not find much resistance here goes above $12458, the most recent high, then I think we could see a much deeper retracement, possibly paving the way towards $1300 again. Meanwhile, if the buying momentum fades and we break below this week’s low then all bets would be off. In this potential scenario, a drop towards $1200 would become likely.
Source: TradingView.com and FOREX.com.
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