FX: Gold may rise by nearly $90 after rising by $24
(July 19) In early Asian trading, spot gold remained stable after surging nearly $24 yesterdayGold priceTrading is around $1978/oz. Windsor Brokers, a well-known institution, wrote an analysis of the technical outlook for gold prices.
Windsor Brokers pointed out that on Tuesday, gold prices jumped to a 1.5-month high, mainly driven by a weaker dollar due to changes in the outlook for U.S. interest rates.After surging 1.2% on Tuesday, gold prices have now broken through key resistance.
US retail sales, known as "terror data", rose 0.2 per cent in June from the previous month, well below expectations of 0.5 per cent, after rising 0.5 per cent in May, according to commerce department figures released on Tuesday.
After the data was released, spot gold rose sharply all the way above $1,980 per ounce, reaching a peak of $1,94.42 per ounce.
Spot gold closed at $1978.59 an ounce on Tuesday, up sharply by $23.59, or 1.21 percent.
US retail sales fell short of expectations in June, Windsor Brokers said, adding to a positive sign of slowing inflation that could prompt the Federal Reserve to end its tightening cycle in the near future. The dollar is under pressure, boosting demand for gold, but gains in gold prices may be limited as the Fed is unlikely to start cutting interest rates in the near future.
Gold technical outlook analysis
From a technical perspective on gold, Windsor Brokers pointed out that the new strong signal points to the continuation of the upward trend that began at $1,892 an ounce (June 29 low) after a brief consolidation over the past three days.
Windsor Brokers said that gold prices have broken through the important Fibonacci retracement resistance level of $1964/oz (38.2% Fibonacci retracement level of the $2080-1892/oz decline) and broken through the cloud floor of $1975/oz.
Looking at the daily chart, the outlook for gold prices is bullish, but overbought conditions warn that bulls may start to lose traction.However, as long as the price of gold remains above the 38.2% Fibonacci retracement level of $1964/oz, then the price of gold may still be driven by bargain buying and rise towards $1986/oz (50% Fibonacci retracement level) and $2000/oz (psychological level).
Windsor Brokers also offers short-term resistance levels for gold prices:
Resistance levels: 1986 USD/oz; 2000 USD/oz; 2006 USD/oz; 2008 USD/oz
Support levels: $1975 per ounce; $1964 per ounce; $1956 per ounce; $1945 per ounce
At 09:00 Hong Kong time, spot gold was quoted at $1978.42 per ounce.
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Disclaimer: The content of this article does not represent the views of the Institute of Foreign Exchange. The content is for reference only and does not constitute investment advice. Investors operate accordingly at their own risk.