Market Forecast: Gold bulls look for momentum to breach 1900

TigerWit Africa

The Gold bullish trend is back to full effect as the treasury yield and dollar look downbeat following Friday’s NFP miss. How high could the yellow metal go this week?

After a fast collapse that was just shy of the 1850 psychological level, Gold resumed the long-term bullish trend as it rallied nearly 400 pips in the last few days. Friday’s NFP miss played a big part as investors’ worry, that the Fed might withdraw a sizeable part of its support earlier than expected, suddenly faded although temporarily. Recovery is coming along faster than expected but the Fed has always said that it would hold its ground until maximum employment is reached while playing softly on inflation.

As events unfold, moods could change and the Fed might act differently. Investors are therefore cautious and thus the current uncertainty will continue to raise bids for Gold as a more preferred safe-haven than the dollar at the moment. Also, the plummeting yield and further dovish comments from the Fed will add to the Gold rallies in the coming days. After a minor decline to 1880 in the Asian session on Monday, Gold returned to 1900 before the current minor decline toward 1890. With the current market sentiment, it looks like the best bet for traders is to buy the dips as the bullish trend will remain intact until a massive sentiment shift.

Gold technical analysis – what next?

Last week Gold forecast suggested a slip from prices beneath 1920 to 1875 key area and 1950 psychology level as the bullish impulse wave pattern mounts from 1675. Just as expected, the price bounced from around 1857 (38.2% Fibonacci retracement level) and will most likely take out the 1920 key psychological resistance.

The chart above suggests that minuette wave (v) (in red) is in motion and by extension, could hit 1929 and 1952 Fibonacci projection target levels. From 1854, wave 5 bullish motive wave count has started. The chart below shows the intraday wave structure as the Gold price tends to aim higher.

Wave (iv) ended at 1854. The resultant surge to 1903 signaled the end of wave i of (v). The current intraday correction seems to be wave ii of (v) and might extend to 1880 intraday support which is also around the 50% Fibonacci retracement of wave i surge from 1854. At the end of the current correction wave iii should proceed above 1903 up to 1950 before the next significant dip in the Gold price. The long-term bullish trend remains intact and the short-term outlook has aligned unless a devastating breach below 1854 happens. Eyes should be on the bond yield and the dollar price.

Disclaimer: This communication is for informational purposes only and should not be viewed as any form of recommendation as to a particular course of action or as investment advice. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. This communication has been prepared based upon information, including market prices, data, and other information, believed to be reliable; however, TigerWit does not warrant its completeness or accuracy. Trading CFDs involve risk and can result in loss of capital.

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