Gold fell broadly on Friday during Asian session, dragging the yellow metal to $1170 an ounce before retracing most of the losses later in the London session. The technical bias remains bearish because of a lower low and lower high in the recent wave.
Long Term Technical Analysis
As of this writing, the precious metal is being traded near $1189 an ounce. A huge support may be noted around $1170-80 which is a strong horizontal level. A sustained move below the $1170 support shall push yellow metal into deeper bearish territory, validating a move towards the $1046 in the long run which is the swing low of the last major downside move as demonstrated in the given below monthly chart.
On the upside, the yellow metal is expected to face a hurdle near $1337 which is a confluence of monthly trendline resistance as well as the swing high of the giant bearish candle emerged after the US elections. A break and monthly closing above the $1337 resistance shall push gold into bullish territory, opening door for $1400 and then $1470 resistance zones.
Federal Reserve officials saw a strengthening case to raise interest rates as the labour market tightened, with some saying a hike should happen in December, according to minutes of their November gathering released Wednesday in Washington. The minutes showed diverse views on the amount of labour-market slack and the risks surrounding their 2 per cent inflation goal. The November minutes also showed officials emphasised that near-term changes in the benchmark borrowing cost would be dependent on economic data, with the expectation that “only gradual increases” would be warranted. FOMC members noted that labour market conditions had improved “appreciably.”
Considering the overall technical and fundamental outlook, selling the precious metal on a breakout below the $1170 support can be a good option. Alternatively, buying around current levels can also be a good strategy if we get a valid bullish reversal candle on dialy chart.
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