Gold: Could Friday’s Reversal be Relied Upon?
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While I wrote an earlier piece, gold bulls were waiting for Fed’s meeting on Feb.1 amid bullish hopes for a breakout above $2,000.
I indicated an advent of exhaustion during the post-fed meet as the Federal Reserve could not overlook the growing inflation.
Since then, gold futures continued a downtrend and hit a low at $1,927 last Friday before closing the week at $1,851. The prices have fallen more than 7% during this period after hitting a peak this month at $1,975 on Feb. 2.
Last Friday, buying was visible, despite the increasing fear of further rate hikes as the U.S. equity indices regained some strength due to the flat U.S Dollar.
Gold Daily Chart for April 2022
We can’t ignore the ethos of April 2022 when gold futures found a sharp reversal after testing a low at $1,816 on Apr. 16 and faced stiff resistance at $1,861 on Apr. 17 before the advent of a steep fall up to $1,830 on Apr. 20, and continued this slide till Jul. 21 when it tested a low of $1,877.
Gold Futures Daily Chart
Technically speaking, in a daily chart, the price could retest this significant resistance once again if the upcoming week starts with a gap-up opening and could resume sell-off below Friday’s closing level as the rate-hike fear is still intact due to supportive economic data.
On the other hand, if they start the upcoming week with a gap-down opening and do not hold the immediate support at $1,830, gold could hit the next target at $1,785 as the 200 DMA is at $1,781 in the daily chart.
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