Bottom line:  Gold is holding resistance around $1747 levels since April 14, 2020. The metal may reverse sharply until prices remain below the $1747 mark, and a break of $1661 would accelerate further towards $1450 in the medium term.

Fundamental Outlook:

Gold prices are struck in a range since $1747 highs in mid-April 2020. It has been in a contracting triangle consolidation and could continue for a while. Even the NFP report last week could not break the range $1740-$1660. Gold may gain as investors look for an alternate, with GDP forecasts for 2020 remain gloomy.

DAX has managed to rally since the beginning of May until yesterday. The indice is trading close to 10784 levels as we write and it is expected to remain subdued for the next 2 trading sessions. Future price action in DAX would be taking cues from German and Euro zone GDP figures coming out on Friday, May 15, 2020. German GDP is expected to print -2%, while Euro zone at -3.3%, YoY.

Technical Analysis:

Gold prices has been consolidating since last 4 weeks after printing highs at $1747 levels. A breakout is imminent as the triangle consolidation nears termination. The yellow metal may terminate around $1705, before reversing lower and breaking below $1661.

The long term structure remains bearish since Gold has been in a multi-year corrective phase since $1920 highs in 2011. The last leg of corrective drop is expected to resume from current levels ($1700) or above $1747 resistance. Initial support is seen at $1450 levels and a break lower would confirm that bears are in complete control.

Most aggressive traders might remain short with protective stops above $1747 levels and medium target towards $1450. A more conservative approach might be to allow a break below $1450 and wait for a corrective rally before initiating short positions.

Prepared by

Harsh Japee, Technical Analyst.

Gold Chart

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