Daily Market Recap - GOLD Weekly Forecast

Gold prices ended the week on a softer note after having shed almost all of their weekly gains on Thursday. The yellow metal had a strong run initially but failed to gather enough momentum to convincingly move above the 1,850-resistance level.

Ultimately, most traders were looking at the pivotal 1,850 marks for signs of a reversal in trend. With hindsight, it can be determined that a change in direction should be cast aside for now as sustained downward pressure continues to be felt in gold prices.

The market has been very noisy of late due to the ongoing discussions over the impact of further stimulus, inflation expectations, and movements in bond markets. The combination of factors has brought about added volatility in the US Dollar and opportunities for gold traders looking to benefit from the range-bound price action.

Historically speaking, gold prices tend to share a close relationship with volatility as compared to other assets. While both the fixed income and equity markets do not typically do well under volatile conditions, the exact opposite can be said about gold.

Gold right now is at risk of falling significantly below the 1,800 per ounce psychological level unless volatility picks up in the coming sessions. Traders may look to capitalize on the weakness in gold for a target of 1,800 before re-entering long towards the lower bound of the current channel around 1,790.

From a technical perspective, gold prices remain locked in a downward spiral with no closer support level below the 1,800-mark other than at 1,780 meaning a minor move lower on Monday may trigger a stronger than anticipated correction. The expected range for gold in the coming week can be set at 1,780 to 1,850.

(Chart Source: Tradingview 15.02.2021)

On the flip side, an argument could be made for gold bulls on the ground of the new 1.9 trillion fiscal stimulus package set by Joe Biden. Traders betting on rising inflation expectations may see the opportunity of getting into the market now and replicate the move prompted by a fiscal stimulus which helped the gold rise in 2020.

Support & Resistance Levels:

R3 1,962.94

R2 1,902.24

R1 1,861.77

S1 1,817.58

S2 1,800.00

S3 1,783.22

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.