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Gold analysis – 25 May 2020
By: Ahura Chalki
Risk-on off was the main gold game of last week. The main topic was reopening the economies, while from the very beginning of the week, tensions between the US and China, attracted attention.
At the weekend, we had many positive and negative news from Covid-19 headlines, like spreading more in new highlighted countries as Brazil, which is the second country after the US at the moment in terms of the number of patients and South Africa, which can be very important for the Gold market as well. On the other hand, the Vaccine preparation contest is getting warmer with more than 10 companies all around the globe and some of them had good news and results as well.
What happened in last week, it was clearly seen in the stock markets, as they traded very mixed. And Gold, which had correction after free fall from the weekly high of $1765 seen at Monday to weekly low at $1717, tested on Thursday, however, the week ended above $1735.
For the week ahead, the main headlines for Gold market still will be about COVID-19 and US china tensions, while investors also will be looking at FED chair speech on Friday, while we will already know the new jobless claims number day before that in the US.
On the other hand, “open interest in gold futures markets shrunk for the second session in a row on Friday, this time by around 2.5K contracts according to preliminary figures from CME Group. In the same line, volume dropped by around 37.5K contracts after two builds in a row.” (FxStreet), which we can read that as a bearish for the Gold market.
Gold price will depend directly on these headlines, and as it is clear, more tensions mean bullish for the Gold market and as long as we will have a calm situation, the gold price will be under pressure.
Gold technical analysis – Daily Chart
In Daily chart, Gold still trading positively. RSI at 55, OBV trend is positive and CCI line above zero, while candles are still forming between the middle and upper band of BB. However, third red Heiken Ashi Candle, signaling of the possibility of correction at this level.
Pivot point: 1733.95
Resistance levels: 1743.61 / 1749.78
Support levels: 1727.78 / 1718.12
Today, the expected trading range is between 1718.12 support and 1743.61 resistance.
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