Yellow metal is shining again with an opportunity to mark a new high of year 2019 in this week. Several bullish factors are lining up to start the New Year including technical, fundamental, geo-political and monetary. The demand for precious metals and base metals is likely to show an increase in 2019, barring a major global economic contraction. For gold and silver, investment demand could swing prices at the margins.
People tend to buy precious metals when they are fearful of holding conventional financial assets. Central bank buying will continue to be a significant source of gold demand, according to the World Gold Council. Russia, meanwhile, continues to be the world’s most aggressive gold buyer. The Russians are adding about 20 tonnes to their reserves every month as they liquidate holdings of U.S. Treasuries.
Another major state buyer of gold is China – and it is likely buying much more than it reports publicly. With the growth of the Shanghai Gold Exchange, precious metals are increasingly flowing into Asia to satisfy growing monetary, investment, and jewelry demand in the region.
From technical prospective we can see that gold is trading in pure uptrend market from short term to intermediate point of view. An uptrend line is also lying on the daily chart from where bulls are finding support and taking it to north side. In the first week of February 2019 we have seen a massive bullish storm till 33750 levels and then we have seen a correction till 32835 levels which is an alternate opportunity to buy again for those who missed earlier.
By applying the fibonacci retracement line from the starting of the rally to end of rally (30100 se 33750 level) we can see that the recent correction was the exact 23.6% and from there it bounced on last Friday. We will keep our short to intermediate bias bullish on the gold as long as an uptrend line remains intact.
The bulls are making successively higher highs and higher lows of the swings on the daily chart. The current rally is followed by weaker USD due to US retail sales sank 1.2% in December in the biggest decline since 2009. What puzzled investors is how sales could have been so weak when other indications were that customers were solid in the month.
Presently gold is trading and sustaining above all the major and minor EMA lines. Last 3 consecutive bullish marabuzo candlesticks has been posted on the chart which is known as three white soldier pattern which is providing us bullish signal. Well in our previous report also we have mentioned that buy the gold around 33,000 with the strict stop loss of 32700 for the target of 32500 and 32500, we are hoping that our readers must have made handsome amount of profit from this move, however it is hovering near to our first target.
On international chart, the $1330 seems as stumble block for bulls and a daily closing above this level will open the way towards the $1340 and $1350 level in near term and the way bulls are reacting it seems like bulls arrive at these level in near term. Gold has marked 10 month’s fresh high on the daily chart and further bullish sentiments are still awaited. Investors are advised to keep their view bullish on the gold as long as $1310-1300 level remains intact, a daily closing below this level will change the bias from bullish to bearish however, the chances are very low for this incidence.
Well short term to intermediate term trend is up so in an uptrend market buy on dips will be profitable strategy and every dips should be convert as buying opportunity. From technical prospective we can see that rounding bottom pattern is in process of formation and it is in completion phase once gold will touch the $1350 level the price pattern will complete automatically.
A bullish crossover on the MACD indicator is generating bullish signal and supporting the bullish momentum. RSI has came out from overbought territory and now it’s providing us fresh buy signal. The 33750 level is key resistance level followed by 34000 whereas 33000 is key support level followed by 32750 level.
Trade idea:- Odds are in favor of bulls and daily to weekly bias remains bullish on the yellow metal so traders and investors are advised to go long at current market price in the range of 33300-33400 for the target of 34000 and 34200 and add your long position till 33,000 with the tight stop loss of 32700 level.