Gold climbs on dollar weakness, What's next?
|Gold extended the rebound from 10-DMA seen in the North American session to hit an Asian session high of $1207.75/Oz levels. The metal strengthened on the back of dollar weakness following Yellen's speech.
Will it sustain above 38.2% fib retracement?
It will be interesting to see if the metal holds above $1204.76 (38.2% fib retracement of Trump sell-off) following Trump’s inauguration.
Moreover, the markets are yet to price-in the risks associated with Trump Presidency. Meanwhile, the unwinding of the ‘Trump trade’ could also gather pace on ‘sell the fact’ trade post Trump inauguration.
In either case, the yellow metal could strengthen - safe haven demand or ‘buy the fact’ trade. Thus, the metal is more likely than not to extend gains above $1204.76 levels.
The metal could head lower only if markets continue to ignore the risks associated with the Trump Presidency.
Gold Technical Levels
A break above $1208.61 (Jan 16 high) would open the doors to $1218.90 (Jan 17 high) and then to $1230.07 (50% fib retracement). On the lower side, breakdown of support at $1200 (zero figure) could yield a sell-off to $1195.70 (previous day’s low). A violation there would expose $1176.45 (50-DMA).
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