Gold prices have rebounded after the flash crash on the weekly open saw prices plunge to the $1,680 swing low. After pricing in the brutal sell-off, price action turned positive, allowing Gold bulls the opportunity to drive price action back towards the key psychological level of $1,800 which remains critical to both the imminent and longer-term move.
With company earnings and better than expected US economic data (including last week’s NFP report) supporting optimism of an economic recovery and riskier assets, rising concerns over the spread of the Delta variant prevented bears from driving prices below the 2021 as US Dollar strength eased.
As prices continue to test critical levels of support and resistance, this week’s FOMC Meeting Minutes may further assist in the catalyzation of price action over the next few weeks as inflationary concerns continue to mount. For this reason, Federal Reserve Chair Jerome Powell remains a potential focal point for Gold traders as his commentary could impact the direction of the trend.
After rebounding off of the 61.8% Fibonacci retracement level of the 2020 move which continues to hold as support at $1,680, Gold bulls are facing a strong wall of confluent resistance, which includes the upper bound of the descending channel that has been forming since prices peaked in August last year. As demonstrated on the weekly chart below, bulls have a number of potential stumbling blocks ahead should the bullish trend continue to further recover prior losses.
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Given the intermediate-term bearish backdrop, with the June sell-off still looming large in Gold markets which runs counter to the strength shown this week upon the test of the 2021 low, the forecast will be set to neutral for the week ahead.
Currently, critical levels remain at the above-mentioned moves between $1,680 and $1,800.
For the short-term move, immediate support currently remains at $1,762 (the 50% retracement of the 2020 move), with the next support level holding at $1,744 (the 23.6% retracement of the 2021 move). A break below this level could see bears driving prices back towards the $1,680 handle.
Chart prepared by Tammy Da Costa using TradingView
Contrary to this, a break above the channel formation and above $1,800 could see the next big level of resistance coming into play at $1,835, the 38.2% retracement of the 2020 move.
— Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
This content was originally published here.
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