Gold vs. US dollar; Gold bugs 'won't hear the bullet'

Currently, the Gold spot is trading at 1238.49, up +0.42% or 518-pips on the day, having posted a daily high at 1239.49 and low at 1232.11.

Although, US data released has been 'decently' positive and constructive the buck seems confused as what to do next. On the other hand, Gold bugs seem to pre-celebrate an expected lower leg for the dollar as Trump's 'America 1st' agenda portrait a weaker economy before economic indicators can signal better days ahead.

Market sources indicate that long-gold positions may be adjusted as the metal reaches $1260-80 region as a healthy 'profit taking' should take place.

Nevertheless, if Trump's tax cuts hit the wires in the next 2 weeks, traders and investors would need to evaluate their portfolios as equities (specific sectors), and other assets can build up momentum and become more attractive than Gold in the short-term. Hence, Gold bugs can be 'over-optimistic' ( won't hear the bullet) as the shiny metal has no yield and in due time this dynamic could reset its current bullish trajectory. 

US Dollar apathetic near 100.80 post-US data

Historical data available for traders and investors indicates during the last 7-weeks that Gold spot had the best trading day at +1.41% (Jan.5) or 1664-pips, and the worst at -1.11% (Jan.18) or (1331)-pips.

Technical levels to watch

In terms of technical levels, upside barriers are aligned at $1260 (200-DMA), then at $1292 (high Nov.10) and above that at $1335 (high Nov.8). While supports are aligned at $1206 (low Feb.3), later at $1184 (50-DMA) and below that at $1146 (low Jan.3). On the other hand, Stochastic Oscillator (5,3,3) seems to reverse and head north. Therefore, there is evidence to expect further Gold gains in the near term.

On the long-term view, upside barriers are aligned at $1245 (short-term 50% Fib), then at $1253 (long-term 23.6% Fib) and above that at $1273 (short-term 61.8% Fib). To the downside, $1216 (short-term 38.2% Fib), later at $1180 (short-term 23.6% Fib) and finally below that at $1146 (low Jan.).

The greenback – gauged by the US Dollar Index seems muted 'at 50-DMA gates' which contributed to a sell-off across the board. However, the bullish tone hasn't been diluted as long as the buck holds 100.20 handle.

In term of technical levels, upside barriers are aligned at 101.74 (high Feb.15), then at 102.48 (high Jan.9) and above that at 103.20 (high Dec.23). Meanwhile, supports are aligned at 99.96 (100-DMA), later at 98.54 (low Nov.11) and finally below that at 97.54 (low No.8).