Gold Rushes Higher – Trade War fear & Rate Cut Hopes Dominate
On Friday, the precious metal gold surged higher, fluttering beneath the 15-week high 1,344 placed in the previous session. Gold’s bullish trend is supported by trade war concerns and a possible interest rate cut from the United States. Lately, we have seen some profit taking from investors; despite that, the bullish trend looks firm.
What’s Causing Buying in GOLD?
Well, three things:
- US-China Trade War
- Fed’s Dovish policy & potential for an interest rate cut.
- Recent weak economic reports out of the United States, keeping the dollar under pressure and boosting haven appeal.
Gold – Technical Analysis
Technical outlook stays bullish as the “Three White Soldiers” continue to extend the bullish rally. On the daily timeframe, you can see three long candles which are showing a robust bullish intention of traders.
Gold has tested a resistance level of 1,344 and closed daily candles beneath, making it a double top level. Stochastic and RSI are incredibly overbought, suggesting chances of a bearish reversal. Gold has closed a shooting star pattern which is suggesting chances of a bearish reversal below 1,344.
Today, the US Nonfarm payroll is going to decide the direction of gold. Positive NFP could trigger sharp sell-off as investors are least expecting it, especially after the release of worse than expected ADP report.
On the lower side, support prevails at 1,326 and 1,316 Fibbo levels, along with resistance at 1,344 and 1,360.
Gold – XAU/USD – Technical Outlook
Support Resistance
1322.57 1341.15
1314.79 1351.95
1296.21 1370.53
Key Trading Level: 1333.37
Gold – Trading Signal
The idea is to stay bearish under 1,336 and bullish above this level with a 50 pips take profit on both sides.
Good luck!
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