Gold, Chart of the Week: Bulls move in on critical recovery area, eye $1,800s
- Gold bulls are eying north of the $1,800s again for the week ahead.
- The price could be due for a meanwhile correction, but the technicals are in the favour of the bulls.
A new week, a new month and bulls remain in control for the open. Gold ended Friday higher by 0.58%, extending gains for a third straight session and on track to recover its losses from the $1,800s lost at the start of July. The precious metal benefits from a lower yield environment and softer US dollar making the precious metal for those seeking a safe haven asset besides the greenback.
It was acknowledged in the last analysis that US yields were on the back foot with the 10-year yield bound for the lower boundaries of the daily chart's broadening formation:
It was stated that ''The broadening formation is compelling which allows more room to the downside, which could be expected to support gold prices.;;
With that playing out, gold bulls have had a clear run higher into the end of July, completing the daily chart's W-formation as highlighted in last week's open as follows, on its way to mitigate the price imbalance, (greyed area):
Meanwhile, for the open, we may see some reflection from traders and investors through the price action resulting in profit taking and a pullback in the price prior to the next potential move higher in order to mitigate the price imbalance between $1,772 and $1,804. There is a confluence in the prior highs and presumed support structure between the 38.2% Fibonacci and 50% mean reversion area around the $1,750s.
''As a short covering rally ensues across global markets, the likelihood for a CTA buying program in gold has risen, but prices still need to close north of $1,785/oz to spark a change in trend signals,'' analysts at TD Securities argued.
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Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
