Gold Rises On Weaker Dollar - Thursday, June 29
Gold inched higher on Wednesday as the dollar’s weakness persisted but a strong session for equities did limit buying interest. XAU/USD tested the initial barrier at around the $1254 level, but was not able to penetrate. As a result, prices returned to the bottom of the Ichimoku cloud on the 4-hour chart.
Prices are above the clouds on the daily and the weekly time frames, indicating that the bulls have the medium-term technical advantage. However, the market is still trapped inside the 4-hourly cloud. These clouds not only identify the trend but also represent support and resistance zones. Basically, the overall trend is up when prices are above the cloud, down when prices are below the cloud and flat when they are in the cloud itself. At this point, another thing to pay attention is that both the Tenkan-sen (nine-period moving average, red line) and the Kijun-sen (twenty six-period moving average, green line) are completely flat, pointing out a lack of momentum.
(Click on image to enlarge)
It seems that the bulls want to challenge the 1254 level again today. If the market can confidently get above there, it has the potential to proceed to the 1260.60-1259 area, where the top of the 4-hourly Ichimoku cloud sits. A break through there brings in 1264. On the other hand, if the bears take over and push XAU/USD below 1247/6, then we may see a drop to 1240/39. Falling through this support could would open up the risk of a move towards the 1236/4 zone.
(Click on image to enlarge)
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Here's what other authors have been saying about the future price movement in gold:
1. Orbex says in its latest article on TalkMarkets (www.talkmarkets.com/.../two-scenarios-for-gold-rally-or-deeper-retracement):
>Is Gold about to rally from here? There are two possible scenarios:
First is a spike from here, given the fact that the US Dollar Index is suffering below 96.0 areas.
The second scenario would be a deeper retracement with a break of its trend support. This could lead to another leg lower, probably toward 1224, which would be the first immediate support followed by 1216.
The bullish outlook remains unchanged as long as gold continues to trade within the higher lows formation. Otherwise, gold would be at risk to visit 1220 once again."
2. AG Thorson contends in a TalkMarkets article (www.talkmarkets.com/.../metals-and-miners-are-bouncing) that:
>A breakout in the dollar should lead to a 1-3 month rally. Precious Metals and Miners are expected to descend into their 6-Months lows as this occurs...Prices could rally a bit more, but the bounce should finish this week. Once complete, we should see a breakdown below the intermediate trendline.
3. Jordan Roy-Byrne in a TalkMarkets article (www.talkmarkets.com/.../gold--gold-stocks-nearing-a-big-move) says:
>Until Gold breaks $1300 and GDX retests $25 the bias for the next big move...should remain to the downside. That is why we remain cautious.
4. Hubert Moolman illustrates that fact in a graph in an article (www.munknee.com/gold-chart-says-a-massive-move-up-or-down-is-imminent/) that shows that:
">Gold is currently trading near a critical 6-year resistance line that the gold price has to overcome, for the continuation of the gold bull market but, since price has now failed more than four times at the line, there is a great chance that we could see a big drop...When gold breaks through the resistance line, however, we will see a gold rally like that of 1979/1980.
5. Sean Brodrick looks at it slightly differently but comes to the same conclusion, more or less, saying in www.munknee.com/this-could-be-the-most-important-gold-pullback-ever-to-consider-buying-into-heres-why/ that
>IF gold breaks support...then you should buy gold and miners with both hands because that will likely mark the beginning of the next Mega Bull trend. The market won’t really turn bullish on gold again, however, until it pushes up through $1300."
I'd like to hear from anyone who would like to expand on what Alp, Orbex, Thorson, Jordan, Hubert or Sean have had to say.
Is this a turning point? Is gold about to plummet further to its 6-month low or is this the beginning of a new gold bull?