Gold on daily charts has been trading in a very narrow trading range and is seen to be testing the lower band of the triangle at the current moment. Bears were finally able to take gold lower below $1300 which had been seen as a hugely important support over the last month. The housing data and the upbeat inflation data which were largely in line with estimates was seen as trigger along with stronger equity markets and stronger dollar which led gold lower in yesterdays’ trading session. The upbeat data has forced the traders and investors to believe that the Federal Reserve would unwind its bond purchasing programme and also take a call with regards to the short term interest rates which is being seen as a huge negative for the precious metal.
On daily charts for Gold, we see the formation of a triangle and the price action for gold is currently testing the base of the triangle. If the precious metal does break below the level of $1289, gold prices would swiftly move lower towards levels of $1267 in the immediate term which is the first region of support for the precious metal. On the upside if we see a break above the levels of $1312 on back of above average volumes we might see the precious metal rally to levels of $1338 which is the first level of resistance for the precious metal. The momentum indicator for Gold has given a fresh sell signal forming a lower high which is indicative of the slight shift of momentum towards the bearish side.
Short Gold if it breaks below $1289 for short term target of $1267 with a strict stop loss above $1300
Long Gold if it breaks above $1312 for short term target of $1342 with a strict stop loss below $1297.