Gold on a bullish spree
Rising tension between U.S and China contributed to the bullish movement of gold. The precious metal jumped from $1,300 to $1,500 in just 4 months. It is currently capped at $1,550 but ready to surge above it. We think the upward movement of gold will depend on how the Fed plays the interest-rate scenario this week.
Last week, ECB lower deposit rates and announced a massive bond-buying program. The Fed might cut interest-rate deeper than expected. If it doesn’t then we might see it in the near future. At the current time, traders could keep bullish in gold while limiting the downside below $1,480.
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The gold uptrend has reached the $1,550 resistance in the previous month and the price settled between $1,500 – $1,550. It is bound for further bullish pressure. However, the uptrend is in pause currently. The precious metal is waiting for a major interest-rate decision by the Fed.
On the weekly chart, gold printed three bearish close. The precious metal started this week by opening above $1,500 which suggest a bounce is in progress. We might see gold continue higher to test $1,550 resistance. At the current time, traders will monitor the weekly close. The bull will expect a close above $1,480 -$1,500. If gold close inside $1,480 – $1,500 range then it might continue the weakness.
We have a possible bounce on the daily chart, but no bullish momentum yet. Gold has closed below $1,500 for several days and it might close below the level again today. If a close above $1,500 happens then it will add the chance for a bounce in gold prices.
Bullish trade – A long positions from $1,480 – $1,500 is the option, traders could take when there is a bullish reaction. (Same strategy as last month)
Bearish trade – Wait until the price fall below $1,480 and retrace toward $1,480 – $1,500 area. When there is a bearish reaction from the area, traders could jump in short positions with a tight stop above $1,500. (Same strategy as last month)