The Price of Gold is currently traversing a range, with the potential for a short-term bullish outlook. After testing the 1970.14 level, the price is now approaching the range zone between the 50-day and 200-day moving averages (MA). Engaging in short-term trades on Gold poses challenges due to the unclear market direction within this time frame.
Nevertheless, let us explore the two scenarios that could unfold.
Scenario 1: Upside Potential In this scenario, the price could climb higher, retesting the 1970.14 level and subsequently targeting the 1976 level. This level holds significance as the 61.8% Fibonacci retracement level. If the market successfully breaches the 1976 level, it opens the possibility for further upward movement, potentially testing the June highs at the 1983 level.
Scenario 2: Downside Possibility Alternatively, the price may decline from current levels, entering a potential range-bound trading session within the 1950-1960 range. It is crucial to monitor price action closely, particularly if the market breaches the 1956 level, as it may find support within the 1956-1950 range. However, if bearish sentiment persists, the market could descend further and find support around the 1947.53 level.
Considering the technical indicators, it is important to note that the long Relative Strength Index (RSI) for gold remains on the bearish side. However, the 50-day momentum is displaying a bullish bias, while the RSI oscillates within an undecided range. These conflicting signals highlight a period of consolidation, emphasizing the need for traders to closely observe how price reacts at these key levels.
Furthermore, it is worth noting that the 50-day MA, located around the 1959 level, could potentially serve as a strong support level. Traders should pay attention to how the market behaves around the 1971 level, as it may provide insights into future price reactions and market sentiment. It is essential to stay vigilant and adapt trading strategies accordingly to navigate this complex environment successfully.
As we head into the next week, major market impact news of US Inflation Data, CPI Data for May, FOMC Meeting, and Jobless claims, could all act a potential factor to steer the direction of the Gold market. We eagerly wait for next weeks news, for the potentially movement and the direction bias of Gold.
