Top Two Reasons Behind Gold’s Bullish Momentum
What’s up, fellas.
Gold traded sideways during the early Asian trade, keeping a narrow trading range of $1,335 – $1,329. The US- China trade tensions and sentiments of an interest rate cut by the Federal Reserve seem to underpin gold prices today. Let’s now discuss two reasons behind the bullish trend in gold.
1) Disappointing US Inflation & Rate Cut Sentiments
According to the figures released by the Labor Department on Wednesday, US consumer prices hardly improved in May, steering to moderate inflation rates that could pressure on the Federal Reserve to cut interest rates this year.
As you know, weaker economic events and chances of rate cut weaken the currency, so they did weaken the US dollar. As a result, the bulls jumped in to capture gold over the safe-haven appeal and cheaper dollar exchange rate. Increased demand thus boosted the precious metal’s prices.
2) 38.2% Fibonacci & Hammer Pattern on Daily Chart
Besides the fundamental factors, gold gained bullish momentum after completing the 38.2% Fibonacci retracement level at $1,319/18. Fellas, I was expecting the overbought commodity to drop further until $1,310 or $1,302 (50% and 61.8% Fibo Levels), but the bullish fundamentals triggered haven appeal.
We can also see a hammer pattern on the daily timeframe, which closed around $1,326 suggesting that bears may be getting exhausted. This also indicates the beginning of a potential bullish trend.
Support Resistance
1321.48 1330.88
1316.02 1334.82
1306.62 1344.22
Key Trading Level: 1325.42
GOLD – XAU/USD – Trade Plan
I will be looking to stay bullish over $1,325 with a stop loss below $1,322 and take profit of around $1,342.
Good luck!
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