- Gold bulls committed above a 78.6% Fibo and 20-D EMA confluence support.
- Long positions from CTA investments adding on dips could support bullish breakout.
- Fed chat leaning dovish.
Gold prices have picked up a safe-haven bid and should the global macro gloom and doom story continue, portfolio diversification will likely keep the price propped up. For sure, its recent rally has the market’s attention, and indeed, we have seen the price test and smash beyond its technical set-up, potentially encouraging longer-term positions from CTA investments on dips.
Fed chat leans dovish
Investors have been piling into US Treasuries, which in turn has been driving yields lower and increasingly pricing in a Fed cut to the market. Indeed, we have heard from a dovish FOMC voting member, Bullard, this week and the Federal Reserve’s Powell the following day who underlined the risks associated with slowing global growth and trade tariffs, hinting towards a dovish bias. Today, Fed’s New York President Williams has delivered some more balanced comments at an event taking place in New York, although he too has noted the risks associated to trade tariffs and said, ‘There has been a shift from a tailwind of fiscal policies to a headwind of trade and tariff issues’ – (That’s dovish). CTAs, however, will be nervous about chasing this trend too high at the extreme having accumulated gold during the technical breakup.
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Fed’s Williams Q&A underway: Inflation has become a little softer this year
Gold levels
Technically, bulls failed to score through the February high at 1347.11 which is guarding a major level at 1357.66 as being the is the 2014-2019 resistance line. 1392.55 is the 2014 high. However, the 78.6% retracement level of the April swing lows to recent swing high’s range has held as a support and bulls took the price up for an additional test of the prior day’s high. So long as the 20 4 HR EMA holds, just below the 78.6%, bulls will likely commit and an extension to the 127.20% Fibo at 1364 could be on the cards. 1357.66, as being the is the 2014-2019 resistance line, could prove a barrier but should the resistance give out, eyes will be focussed on 1392.55 as the 2014 high. On the downside, below 1306,1297 is likely a line in the sand being the 50% Fibo retracement of the late April and early May double-bottom swing lows to recent spike high. The 55-week MA sits around 1260.24 and the 200-week ma comes in at 1249.24.
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