Gold bears lining-up for potential profit-taking scramble


  • Gold consolidates as market get set for a breakout, one way or the other.
  • Month-end flows could be the trigger to set off a phase of distribution. 

The price of gold has accumulated bids and offers in a precarious spot on the charts, drawing in anticipation of a phase of distribution. 

On the day, the price has stuck to a tight range of between $1,765.94 and $1,775.69 and is down by 0.07% at the time of writing.  

However, gold futures settled with a modest gain and leaves the prospects for a positive half of a year by quarter-end for prices. 

COVID-19 is a major factor for gold's safe-haven flows and a second wave hitting global economies, is bound to keep prices elevated.

However, profit-taking could well be a consequence of month-end which could potentially lead to a technical breakdown in the chart. See below.

Declining real rates should imminently support gold prices into the $1800s

However, the fundamentals are a likely factor to keep bears second guesing.

"Indeed, with rates vol constrained, rising long-term inflation expectations have been a powerful driver lifting gold prices higher,' analysts at TD Securities explained. 

Price action continues to lend strength to our view that gold's role is shifting from a safe-haven asset, to an inflation-hedge product.

Looking forward, we also see substantial room for this driver to run, as the entire maturity spectrum of inflation breakevens are still priced below policy objectives.

In this context, declining real rates should imminently support gold prices into the $1800s. 

The analysts also explained that "the world-war era fiscal and central bank stimulus, the change in the central bank template that will incorporate 'symmetric inflation targets' and unwinding globalization, also suggest that inflation-hedge assets may grow in popularity. 
Eventual tailwinds in commodity demand should also be particularly supportive of silver prices, which have retained their historically high sensitivity to their industrial component.'

Gold levels

XAU/USD

Overview
Today last price 1770.35
Today Daily Change -0.99
Today Daily Change % -0.06
Today daily open 1771.34
 
Trends
Daily SMA20 1732.05
Daily SMA50 1722.11
Daily SMA100 1667.98
Daily SMA200 1586.78
 
Levels
Previous Daily High 1772.04
Previous Daily Low 1747.59
Previous Weekly High 1779.41
Previous Weekly Low 1742.97
Previous Monthly High 1765.38
Previous Monthly Low 1670.72
Daily Fibonacci 38.2% 1762.7
Daily Fibonacci 61.8% 1756.93
Daily Pivot Point S1 1755.27
Daily Pivot Point S2 1739.21
Daily Pivot Point S3 1730.82
Daily Pivot Point R1 1779.72
Daily Pivot Point R2 1788.11
Daily Pivot Point R3 1804.17

 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD: Portrays bearish set-up on D1 below 1.1900

EUR/USD edges lower around 1.1870 amid a quiet start to the week’s Asian session trading on Monday. The major currency pair snapped a four-day uptrend on Friday, posting the bearish spinning top candlestick.

EUR/USD News

GBP/USD: Bears brace for 200-SMA retest

GBP/USD begins the trading week on lower ground near 1.3900. The cable pair broke a short-term rising channel during the late Friday and teased bears amid a downward sloping Momentum line. The selling currently aims to retest the 200-SMA support near 1.3835, a break of which could highlight the 1.3770 area comprising multiple levels marked last week.

GBP/USD News

EUR/USD: Portrays bearish set-up on D1 below 1.1900

EUR/USD edges lower around 1.1870 amid a quiet start to the week’s Asian session trading on Monday. The major currency pair snapped a four-day uptrend on Friday, posting the bearish spinning top candlestick.

EUR/USD News

Tide turning in favor of SHIB bulls, as $0.00000750 beckons

Amid an upbeat momentum seen across the crypto board, Shiba Inu is taking inspiration on Sunday, as it looks to extend Saturday’s upswing from near the $0.00000590 support area. SHIB bulls await acceptance above 21-DMA to unleash further upside towards 50-DMA.

Read more

Challenging week ahead

Three macro considerations are shaping the investment climate: the evolution of the virus and the response, the timeframe of the Fed's tapering, and China's broad regulatory crackdown. Beijing's new policy initiatives are broader and quicker than generally anticipated.

Read more

Forex MAJORS

Cryptocurrencies

Signatures