Gold started a new week with a small growth of 0.3%. At the same time, the low of 2023 was again renewed during the Monday trading, now it is below 1807. It is noticeable that most of the downward movement is already over, however, there are still not enough strong fundamental prerequisites for a significant upward rebound. From a technical point of view, gold has an important target at the bottom in the form of a 200-day Moving Average, now it is in a range of 1785-1790.
Traditionally, the price above the 200-day Moving Average is a sign of an upward trend. Gold has been in an uptrend since November, and the bulls need to stay above the Moving Average now, otherwise, gold could quickly reach even lower levels at 1730-1740.
According to Standard Chartered comments, the gold market may reach a rock bottom price in the short term. At the same time, expectations of a longer cycle of monetary tightening in the US with a higher peak in interest rates remain the main driving force behind the fall of gold.
Concerns related to the probable decrease in gold demand from China also increased. In January, China replenished its gold reserves by only 15 tons instead of the previously predicted 62 tons. Hong Kong Census and Statistics Department inform that China's imports of the main precious metal fell 47% to 23 tons last month.
Besides, an outflow of funds from the ETF continues to affect the gold market, especially from European investors. Rising bond yields hurt the attractiveness of gold.
The RSI indicator fell to the oversold for the second time in two weeks, but it still hasn't yet formed a strong reversal signal.
We may offer you the following option of trading strategy:
Sell gold in the range of 1810 - 1820. Take profit 1 — 1800. Take profit 2 — 1785. Stop-loss — 1840.
Also, traders can use Trailing stop instead of fixed Stop-loss at their disposal.
This content is for informational purposes only and is not intended to be investing advice.
