Gold on track for test of trend-line resistance in interim bull channel, although key events open 1266/03 parameters
- Gold has found demand again as the price moves within a bullish interim channel within a broader wedge pattern ss the dollar gives back some ground.
- Gold is currently trading at $1,283.88oz between a range of $1,279.77oz and $1,286.22oz and the price has been helped along by a drop in the Chicago Purchasing Managers Index.
Gold prices have been seeking an upside target towards the $1,290s within the falling wedge since bottoming out on the 23rd April down at $1,266.42oz as investors tussle with a stronger dollar vs the global economic growth dynamic.
It is a busy week ahead this week for markets and specifically the greenback given the number of slated events, from ISM manufacturing, the Fed and nonfarm payrolls squeezed into a three-day window. However, the dollar has already suffered a premature blow given today's result in the Chicago Purchasing Managers Index that fell to an April reading of 52.6 from 58.7 in March, sending gold higher by almost $5.00 as the dollar sank from 98.30s to a low of 97.44. Economists had been looking for a reading of around 59.0 but the reading arrived at the lowest since May 2016 - The impact was felt heavily ahead of tomorrow's Markit and ISM manufacturing data as a potential precursor for the numbers.
Gold levels
Gold is within a rising interim channel within the descending wedge, and bulls seek out a test towards the ceiling of the wedge with momentum indicators aligned bullishly; The upside remains compelling following the recent spike from the solid support of the 38.2% Fibo. Bulls can focus on a target of 1303 (23.6% Fibo) with a look at the trendline resistance. However, below the 38.2% Fibo, 1275 and 1266, prospects switch back to the 200-D EMA and confluence area of the 50% retracement target of 1250/1253 respectively.
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.
