KTM Friday Commodity: Trading Gold
- Gold lost 200MA has been the headlines.
- The yellow log worst fall in four weeks.
- Gold has strong support at $1764.
The yellow metal trading the week on a very weak note as the USD bids well. Besides, US 10yields closed at 1.15%, the highest level since February 28, 2020.
On Thursday, Gold fell over 2%, and Silver followed. Following the colossal rejection of $1875, we are finally entering the major support level. November 30, 2020, low and May 15, 2020 high coincides at $1764. If you are bullish on Gold, then this is the place to take a shot.
Flipside, a breakdown below $1764 would sign that the trend has reversed. The A-B-C corrective structure says a fall below $764 can take the price down further to as much as $1710-$1690. We would be concerned if Gold could not push-and hold -above $1830 over the next day or two. Traders may need to see where the US 10yields is marching. This year, the US 10yr yields were rejected five times at 1.15%. A decisive breakout above 1.15% could push the yields further North towards 1.18% before it reaches 1.30% and 1.50%. Overall, 1.15-1.18% is the level we watch closely in Q1 2021.
Manuel Oliveri, an FX strategist at Credit Agricole, says, “We remain in favor of buying dips in gold. While more supported US yields coupled with firm risk appetite has been dampening the yellow metal of late, we do not expect this to prove sustainable”.
With the dollar trading near its 100MA and Gold trading tad above the key support level of $1764, there is a chance of Gold forming a double bottom around $1764, like how Silver made a double bottom around $21.50 between September-November 2020.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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