Gold bugs will no doubt be pleased with the recent rally in the precious metal but further gains could be in question as the bearish trend line is likely to cap further gains.
The past few weeks have been one of celebration for precious metal advocates as Gold and Silver seemingly turned a corner and started trending higher. The rally was largely fuelled by mounting speculation over the current state of the US economy and Yesterday’s weak ISM figure seemed to confirm that softness abounds. However, despite the encouraging fundamentals, the metal appears to have run into the road block in the form of the long run bearish trend line.
Taking a close look at the charts shows Gold remaining under the influence of the long term bear trend. Price action has remained capped below the trend line and has subsequently continued to decline in an impulse wave fashion. In confluence with price action, RSI has been trending strongly north and as price reached the trend line, RSI has also reached into overbought territory. Subsequently, the metal is likely to be in for a downside retracement in the coming days.
In fact, looking back to October shows a similar trade setup as price rallied sharply to the trend line before failing and pulling back towards the central tendency. The comparison with RSI is also stark, showing a touch upon over-bought territory, before falling in line with the retracement.
Subsequently, expect to see Gold fail at the current test of the bearish trend and retrace back towards major support around the key $1100 handle. However, a major fundamental event looms on the horizon in the form of the US NFP and unemployment figures that could spoil the party. Given the fundamental softness of the current US economy, expect the NFP figure to be under pressure and to potentially impact commodity markets.
Risk Warning: Any form of trading or investment carries a high level of risk to your capital and you should only trade with money you can afford to lose. The information and strategies contained herein may not be suitable for all investors, so please ensure that you fully understand the risks involved and you are advised to seek independent advice from a registered financial advisor. The advice on this website is general in nature and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances. The information in this article is not intended for residents of New Zealand and use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Knight Review is not a registered financial advisor and in no way intends to provide specific advice to you in any form whatsoever and provide no financial products or services for sale. As always, please take the time to consult with a registered financial advisor in your jurisdiction for a consideration of your specific circumstances.
Recommended Content
Editors’ Picks
EUR/USD holds above 1.0700 ahead of key US data
EUR/USD trades in a tight range above 1.0700 in the early European session on Friday. The US Dollar struggles to gather strength ahead of key PCE Price Index data, the Fed's preferred gauge of inflation, and helps the pair hold its ground.
USD/JPY stays above 156.00 after BoJ Governor Ueda's comments
USD/JPY holds above 156.00 after surging above this level with the initial reaction to the Bank of Japan's decision to leave the policy settings unchanged. BoJ Governor said weak Yen was not impacting prices but added that they will watch FX developments closely.
Gold price oscillates in a range as the focus remains glued to the US PCE Price Index
Gold price struggles to attract any meaningful buyers amid the emergence of fresh USD buying. Bets that the Fed will keep rates higher for longer amid sticky inflation help revive the USD demand.
Sei Price Prediction: SEI is in the zone of interest after a 10% leap
Sei price has been in recovery mode for almost ten days now, following a fall of almost 65% beginning in mid-March. While the SEI bulls continue to show strength, the uptrend could prove premature as massive bearish sentiment hovers above the altcoin’s price.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.