Recent News
US Economic Data: The release of the US Consumer Price Index (CPI) data on August 14 showed a slight increase, which led to fading expectations of an imminent rate cut by the Federal Reserve. This resulted in a minor decline in gold prices, as the likelihood of a rate cut, which would weaken the US dollar and boost gold prices, seemed less certain.
Global Geopolitical Tensions: Ongoing geopolitical concerns, particularly regarding the Middle East and Eastern Europe, have kept demand for gold strong as investors seek safe-haven assets. These tensions are expected to keep gold prices supported in the near term.
Chinese Demand: Increased demand from China has also been a significant driver, pushing gold to new record highs. This demand surge is attributed to both economic and geopolitical factors.
Market Volatility: Despite the recent declines, the market remains volatile, and analysts expect more fluctuations in gold prices depending on upcoming economic reports and geopolitical developments.
Overall, while gold saw a brief dip in mid-August, the market remains strong due to continued global uncertainty and potential shifts in US monetary policy (Kitco) (mint).
Technical Analysis
The daily chart is still bullish despite the recent drop in Gold prices. The 50 MA is still above the 100 MA and the overall trend is strong. We still see higher highs and higher lows and until that stops happening, the bullish outlook remains.
Trade Opportunities:
Bullish Scenario:
- Entry: Consider entering a long position if the price closes above the R1 level ($2,537.3) on strong volume. This would signal a continuation towards R2 ($2,601.5) and potentially R3 ($2,706.5).
- Stop Loss: Place a stop loss just below the pivot point at $2,432.3 to protect against a false breakout.
- Target: Initial target at R2 ($2,601.5) and then R3 ($2,706.5) for a more extended bullish run.
Bearish Scenario Scalp:
- Entry: A short position can be considered if the price fails to hold above the pivot point at $2,432.3 and drops below the 50-day moving average ($2,415.8).
- Stop Loss: Place a stop loss just above the pivot point at $2,432.3.
- Target: Target the support levels at the 200-day moving average ($2,385.4) and S1 ($2,292.5) in case of a deeper pullback.
Final Recommendation:
Given the current bullish trend and the breakout from the symmetrical triangle, the high-probability trade is on the long side, with careful attention to the resistance levels at R1 and R2. A confirmed breakout above R1 on strong volume would provide an excellent opportunity for a long position with favorable risk-reward. However, if the price reverses and falls below the 50-day MA, a short trade could be considered, targeting lower support levels.
