Gold markets continue to show a lot of tight trading in this general vicinity as the $1750 level has offered too much in the way of resistance. On the other hand, there is a lot of support underneath, extending all the way down to the $1690 region, which coincides quite nicely with the 50 day EMA. So, any pullback to this mark may be a nice buying opportunity as the gold markets have been extraordinarily strong.
Gold prices on Thursday moved lower, unable to break out to new highs, after hitting a fresh 7.5-year high. The Dollar edged slightly higher generating headwinds for the yellow metal. Prices seemed to hold support near the 10-day moving average at $1,723. Resistance is seen near the May highs at $1,765. Short-term momentum has turned negative as the fast stochastic recently generated a crossover sell signal in overbought territory. Medium-term momentum has also turned negative as the MACD (moving average convergence divergence) recently generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).
In either situation, consolidation or then continuation is typically the move. Beyond that, we have central banks around the world printing currencies and plenty of headline risks out there that could come into play. In other words, there are a whole multitude of reasons why the market may continue to go higher in the longer term, but that does not mean that it will do it in a straight line. The $1,750 level is an obvious extreme resistance, and one would have to think that if we can ever break above the $1800 level the gold market should shoot straight up in the air much like a “beach ball being held under water.”
Fundamentally, the longer-term view is still bullish with plenty of stimulus money floating around out there. Over the short-run, however, those traders looking for an excuse to book profits, found one in the form of renewed concerns over simmering tensions between the United States and China.
From Technical point of view the main trend is up according to the daily swing chart, however, momentum shifted to the downside. A trade through $1,775.80 will signal a resumption of the uptrend. The main trend changes to down on a trade through the last swing bottom at $1,676.00. Taking out $1,757.60 will change the minor trend to up. The short-term range is $1,788.80 to $1,666.20. Its 50% level at $1,727.50 is controlling the near-term direction of the market. The main range is $1,576.00 to $1,788.80. Its retracement zone at $1,682.40 to $1,657.30 is the primary downside target. This is a major support area, having stopped sellers at $1,676.00 and $1,666.20.
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