Gold had a very volatile session on Friday. The precious metal broke below the important support zone of $1301 on news of a below than expected rise in producer prices indicating that there were no risks of inflation at the current moment in the economy. However Gold witnessed a huge pull back from the lows of $1291 which is the support of a upward sloping trendline on news that the tensions between Russia and Ukraine escalated after Ukraine claiming to have destroyed a Russian armoured vehicle. As soon as the news filtered through, investors and traders dumped equities and bought gold as a safe haven investment and also as a hedge against any further escalation of the situation.
On the daily charts of Gold, we see the precious metal trading in a very narrow range with $1321 acting as resistance on the upside and $1290 acting as a critical support on downside. Traders are closely watching both these levels very closely as any breach of these levels on the back of strong volumes can see the precious metal rally close to 5 percent on either side. The momentum indicators for gold are still in bullish territory and the smart pull back from lower levels would give bulls respite going into trade. Gold closed above the important level of $1300 which psychologically a very important level to look at. Also, the pull back meant that gold was able to close above the all important level at the 20 day EMA which currently sits at $1302.
Sell Gold below $1290 with a primary target at $1270 and a strict stop loss at $1301
Buy Gold only above $1321 with a primary target at $1347 with a strict stop loss at $1291