Chart of The Day Gold
Gold Probable Price Path & Potential Reversal Zone
No taper plans according to the Fed - Bullard opined that “we want to get through the pandemic and sort of see where the dust settles, then we will be able to think about where to go with balance-sheet policy”, while George echoed that it was “too soon to speculate” and Mester also noted that the 2021 outlook “would not require a change in monetary policy”. Meanwhile, calls for US outgoing President Trump’s impeachment continued to rise, with the House likely to vote today, but Trump said the “25th Amendment is of zero risk to me”. The S&P 500 ended unchanged while VIX fell to 23.33. The 10-year yield surged to 1.19% before recovering back to 1.13% amid a strong 10-year bond re-opening. Similarly, the 30-year bond yield hit 1.91% intraday. The USD slipped as UST yields retreated, with the 3-month LIBOR at 0.2338%, while oil and gold prices rose overnight.
From a technical and trading perspective, the GOLD witnessed a weekly key reversal pattern to start the new year just as CFTC data showed traders adding long positions, with Gold positioning remaining stretched on the long side versus historical metrics. On the H4 chart we can track a corrective structure developing which should terminate in the 1880/95 area which represents an equality objective versus the 1835 swing low and the weekly and daily projected range resistances. As such watch for bearish reversal patterns to develop in the highlighted amber action area to deploy short exposure targeting a retest of 1770/60 a failure of sufficient demand to develop in this area would open the potential for a deeper decline to test the projected ascending trendline support and broader weekly equality objective at 1660. Only a close back through 1930 would negate the downside thesis.
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