The role of gold as a protective asset.
Hello, dear traders!
Today, we will analyze the technical picture of gold. To be honest, for a hundred years, I have not considered the graphics of this noble metal. However, this has its pros and cons. Plus, after such a long break, there is a chance to see the technical nuances, as they say, with an unwashed eye. To begin with, a little about the general background, which affects the quotes of the most popular precious metal.
Let me remind you that gold is a protective asset and in troubled times is in high demand among investors, and its price is rising. Naturally, trade confrontation between countries with the first and second world economies has a significant impact on metal quotes, that is, a trade war between the United States and China.
Just yesterday, the 45th President of the United States, Donald Trump, once again through his world-famous Twitter said that the conclusion of a large trade deal between Washington and Beijing is close. Both parties wish to conclude it.
In general, the situation here is as follows. The US has made an offer to China to reduce by 50% duties on goods from China in the amount of $360 billion. Also, the United States will offer to refrain from imposing new tariffs, which were scheduled for December 15.
This statement by Trump led to an improvement in sentiment on trading floors and increased risk appetite. As a rule, the risk sentiment of market participants leads to a decrease in gold prices, which was observed at yesterday's trading.
Weekly
The weekly chart of XAU/USD clearly shows consolidation in the selected range. In the vast majority of cases, after such consolidations, there is a sharp exit of the price from the existing range and there are good and directed price movements.
Given the current upward trend in gold, it is logical to assume that we will see the continued growth of gold quotes. However, an alternative scenario should always be considered.
For the fifth week, the quote is trading around the Fibo level of 23.6 from the growth of 1160-1557 dollars per troy ounce.
In the case of a downward scenario, the price of gold will fall to the Fibo level of 38.2 and to the area of 1390, where the 50 simple moving average passes.
If the market decides to resume and continue the upward trend, XAU/USD will first head to the strong technical level of $1515 per ounce, and overcoming this mark will open the way to 1535 and highs at 1557.
Daily
On the daily chart, the quote got bogged down between the Tenkan and Kijun lines of the Ichimoku indicator. At today's trading at the time of writing, gold prices are showing growth. If market sentiment does not change, I expect further strengthening of the precious metal in the area of 1480-1486 dollars per ounce. Taking into account the closure of the weekly trading and profit today is unlikely to count on a higher purpose. Nevertheless, above 1486, there is a cloud of the Ichimoku indicator, which will become another obstacle for bulls on the way of moving the quote up.
On the other hand, I would like to note that yesterday's candle looks like a reversal and does not give special reasons for optimism. If the gold market decides to work out this model of candlestick analysis and moves the rate down, the nearest and very important goal will be supported at 1445, from the breakdown (or lack thereof) which will determine the further direction of XAU/USD.
In my personal opinion, there is a better chance of continued growth, so I consider buying gold the most relevant. You can try opening long positions gently from current prices or while lowering to the area of 1468-1463.
Do not forget about the role of gold as a protective asset, so the direction of the quote of XAU/USD will largely depend not only on technical factors but also on market sentiment.
Successful trading!
