- Gold prices on the verge of significant upside correction.
- A weekly 50% mean reversion of the bearish impulse could be on the cards.
The price of gold is trading at $1,731 in a tight range in very quiet markets on Tuesday in early Asia,
Overnight, the yellow metal was attempting to break a key resistance area, albeit without conviction, travelling within a tight $1,721.72 and $1,734.57 range and ended by the bell on Wall Street up 0.25%.
Meanwhile, gold was robust no matter that the US dollar was also firmer.
The US dollar was taking its cues from a more positive outlook for the US economic recovery as traders get set for this week’s FOMC meeting.
Markets expect that the Fed will upgrade growth projections due to the successful vaccine rollout and recently agreed on fiscal stimulus.
A more hawkish bias would be strongly bullish for the US dollar and gold will be weighed by bond markets in decline for the foreseeable future.
The outflows from the precious complex would be expected if real rates continue to rise and so long as such heads as US Treasury Secretary and Fed speakers continue to play down inflation risk, seeing the risk as only small, transitory and manageable.
Gold technical analysis
With the price supported by the 21 month SMA, the bears ate being held in check, for now.
From a weekly perspective, the bulls are looking to old support to act as resistance around a 50% mean reversion of the bearish impulse at $1,765.
Weekly chart
4-hour Momentum is bullish also. The price is above the 21 SMA and a break of current highs at $1,740 will be highly bullish.
4-hour chart
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