Gold was subject to a sell-off on Friday. It was down 1.7%, losing most of its weekly gain. Many analysts say a correction is required, after which the gold rally will continue towards new historical highs. The asset's volatility on Friday was the highest in a month. Nevertheless, the bullish trend managed to persist, so we should expect the support level to rise in the coming days.
Analysts remain optimistic on gold. However, they do not rule out a possibility of a correction before the rally.
Phillip Streible, chief market strategist at Blue Line Futures, considers the gold's uptrend to be dominant if the price remains above the level of $1953. Darin Newsom, senior market analyst at Barchart.com, is optimistic about gold, but notes that the price of the precious metal is slightly inflated. Mark Chandler, managing director of Bannockburn Global Forex, sees support for gold at $2000, although he has also mentioned the importance of the $1990 level. James Robertson, an analyst at Grant's Interest Rate Observer, talks about the significant growth potential for gold as western retail investors are returning to the precious metals market.
Gold has already reached some analysts' correction targets, but an increased pressure on the prices should not be ruled out. Statistically, the economy is slightly weakening, but central banks are not toning down their rhetoric. This increases the uncertainty about gold prices going up in the near future. Therefore, it's better to stay cautiously positive on the metal. At this point, small upside targets should be set.
According to the technical analysis, gold has maintained a bullish trend. Today we see a technical rebound from the support, which could continue for a couple of days. The local high that was reached in the beginning of April, equal to the price of $2030, can be considered as the metal's upside target. This level was chosen for a reason. In case of proceeding correction in gold, the current rebound to this level will act as a shoulder at formation of a head and shoulders pattern. After that, a new wave of correction may follow. A Stop-loss could be placed at the prices falling below Friday's bearish candlestick, fixing under the support level of $1994.
A rise in gold prices:
Take profit – 2030
Stop-loss – 1994
This content is for informational purposes only and is not intended to be investing advice.
