Gold drops to $4,397: Rebound to $4,600 or further drop to $4,200?

Gold extends correction on profit booking.
Dollar Index gains strength on hawkish Fed.
Markets extra cautious on renewed geo political twists.
Markets expect a rebound before 2nd leg of correction.

Sunil Kumar Dixit SK Charting

Gold has completed bullish impulsive wave at the threshold of $4700 and a follow up A-B-C correctional wave has begun.

Wave A is almost complete at $4397 and current bullish consolidation is forming Wave B which is expected to witness a bounce towards $4580 - $4620 but price needs to show a strong breakout above immediate hurdle $4510

Once Gold completes bounce back and mitigates $4580 - $4620, we expect formation of Wave C which may extend downside correction towards $4330 - $4250

If selling pressure intensifies, near term correctional drop may extend to $4100

Traders will watch reaction to immediate challenge at $4510 and a strong breakout followed by recovery bounce towards $4580-$4620

Rejection on heights are likely to witness selling bets being repositioned while value buying will be seen at the deeper correction around $4330-$4250

It should be noted that precious metals are data and news sensitive in a rapidly evolving dynamics of fiscal and geo political headlines that directly and substantially impact dollar denominated Gold prices.

Gold traders are also watching the resistance in Dollar Index at 99.90 which affects Gold prices.

The current drop in Gold is a correction amidst a broadly bullish trend which many traders see as value buying at bargain than chase the overheated rally.

Note: The views expressed are based on price action dynamics and not meant to be a trading recommendation.

Author

Sunil Kumar Dixit

SK Charting

Sunil Kumar Dixit is Chief Technical Strategist and founder of SK Charting, a research firm based in India. He tracks Precious Metals, Energy, Indices and Currency Pairs. He also participates as an expert panellist on Channel Television, Nigeria.

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