Gold long term outlook
- Gold jumped almost $10 from yesterday’s low of $1273. The main reason for jump is due to weakness of US dollar. US dollar index declined almost more than 75 pips from the previous week high of 94.03 and is currently trading around 93.20. Markets remain quiet as long weekend due to Christmas holiday. Any break below 93 (trend line support) will drag the index to next level till 92.50/91.92. The yellow metal jumped till $1283.61 and is currently trading around $1282.47.
- Gold price is expected to trade higher in year 2018 as US national debt is rising. US national debt and gold have positive correlation. Currently US debt is around $20 trillion and each citizen debt share is around $61000.
- US fed monetary policy is another factor which affects gold prices. Market anticipate fed to hike interest rates three times in 2018. But previous monetary policy shows that inflation is major cause of concern and any decline in further inflation will stop fed from increasing rates three times in 2018.
- On the higher side, gold is facing strong resistance at $1287 (20- W MA) and any break above will take the yellow metal till $1300. Any close above $1300 will take the gold to next level till $1324 (78.6% fibo)/$1357 (Sep 2017 high)/$1375.
- The near term major support is at $1260-63 (200- day MA and 55- day EMA) and any violation below will drag the metal to next level till $1232-38 (50% fibo)/$1200. Overall bullish invalidation only below $1200. Any break below $1200 will drag the gold till $1122(Dec 2016 low).
It is good to buy on dips around $1250-55 with SL around $1200 for the TP of $1357/$1375.
Source: FXWire Technicals