Gold snaps three-month losing streak, but LT outlook remains bearish

Gold looks set to end the three-month losing streak. The metal is seen ending January at least 4% higher. This is the last trading day of January; hence we take a look at the developments on the monthly chart.

Monthly chart

• The above chart clearly shows that the rally seen this month is a corrective move of the larger downtrend.
• Take note of the repeated failure seen last year at the resistance offered by the descending trend line drawn from 2011 high and 2012 high.  
• More importantly, gold failed to take out the key trend line hurdle despite Brexit, Trump victory.

View

• The long-term (LT) view remains bearish as long as prices remain below the trend line hurdle currently seen around $1270 levels.
• 5-MA and 50-MA are sloping downward, which suggests any rally above $1220 and towards $1270 could be exploited by bears to hit the market with fresh offers.
• On the other side, breach of support at $1146 would open up downside towards the head and shoulder neckline support seen around $1100 levels.
• A monthly close below $1100 could turn out to be a disaster for the Gold bulls.

FTSE 100 – Outlook depends on today’s day end close

Daily chart

• Monday’s bearish daily close below 7130 adds credence to the view that the index has topped out at 7354 and could test 50-DMA support seen around 7036 in the short-term. The rising trend line support comes around 7000 levels.
• The 10-DMA level of 7175 could offer resistance today.
• Only a daily close above 7206 (Jan 25 high) would signal the correction from the recent high of 7354 has ended.