BUY GOLD at USD1792, TP USD1832, SL USD1762
Last week I posted a short article on my short-term views on gold (see All Quiet on The Gold Front) and why I didn't have much conviction at the time given the recent ranges. I also explained yesterday how I entered a short position on gold at the top of the range at USD1833/oz. This has paid off nicely as you can see in the chart below (the far right hand red box is where I entered short).
Source: FXPro MT5
Today, gold has tumbled lower by the most in a month as both the USD and US Treasury Yields have pushed higher. Generally, higher interest rates means lower gold (because gold doesn't pay any interest). The chart below is just the gold chart for today (each candlestick is 5 minutes) and we can see it's been pretty much one way traffic downhill.
In my previous big post on gold, I outlined a possible trade whereby you enter in USD8 increments as gold moves down. I initiated this at USD1808, bought more at USD1800 and once again at just above USD1792. This trade is based on my general bias for gold to go higher but I'm not sure on the timeline.
From a technical perspective, there are nice reasons to get long here too. The first chart again shows that we have entered oversold territory on the RSI 1h chart, pointing to a potential reversal. Likewise, we are coming into areas of significant support which have held up well before (1788-92 and then 1776 and lastly 1764). This means it would take something fairly significant to drive down gold below these levels.
Finally, there is a nice trend line marked up on the chart with the three red rectangles which has not yet been broken and should provide additional support to the upside.
In the September Fed meeting, we are still likely to see a dovish Fed on the back of the week NFP numbers last week, so this means there is no immediate pressure for lower gold, and instead I expect to see a continuation of the recent ranges.
All-in-all, now seems like a good time to start building a long gold position entering gradually in USD8 move increments.
BUY GOLD at USD1792, TP USD1832, SL USD1762
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