The Gold Forecast For June-July
Jesus Aldana | Jun 24, 2017 03:30PM ET
What a week for gold, after a straight decline for almost a month, we see some bullish movement this week from the yellow metal. Before going technical, first I want to share what has taken place the past days.
Fed Rate Hike Concern
Although the Fed raised bank interests, most traders are skeptical of a dollar rally as inflation, unemployment, home sales and other indicators all show a weaker economy since Trump entered as president. According to numerous sources such as Pimco advisor, Bloomberg, and even Neel Kashkari, all point out that Yellen made a mistake by raising rates as it will hurt the US economy.
It is more than evident that investors aren’t happy with rate hike as prices haven’t changed much since news release, price would need to pass through support line in order to determine a bullish trend
Two weeks ago Nasdaq was down 2% crashing all stocks in tech sector, Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL) and bitcoin are just some of the commodities who were highly affected.
The “crash-lite” in tech and momentum stocks should “serve as instruction for how one might handle a market top — whenever that might be,” says J. Lyons Fund Management’s Dana Lyons.
The event occurred just as most tech companies reached a peak in their valuation, which lead investors to quickly close their active contracts. This event shows how investors are acting against bubble behavior and avoiding scenarios just like in 2009.
It hasn’t been a good month for oil companies as prices has dropped to an 8 month low. Most investors use oil as a safe haven in hard times however this isn’t an occasion. Since the OPEC meeting in May 25, oil has struggled as traders are disappointed in how meeting outcome came through.
Although prices are intending to recover as it touched support line, it’s going to take weeks before we see the oil raising
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Fundamentally
As many of us already know, when things start getting tough investors start looking for a safe haven that can steady or reevaluate their money. Precisely at this moment the US dollar isn’t a good option leading investors to use cryptocurrency, however the recent tech crash made them realize that tech bubble isn’t a safe option at this moment.
This is why gold sector has started its rally, as many traders and investors are reaching a safe investment where their money is free of risk.
Technically
According to my last post “Gold Bullish or Bearish” there were two possible analysis of gold, the magenta line shows a support trend since February, for this scenario to work out, it had to drop to 1224 and bounce up. The blue line shows a support trend since January, if this scenario was correct, then price would need to bounce up at 1244.
On the next day we saw that second scenario was achieved, and looking closer an inverted head and shoulder was formed confirming a trend change. At this moment price is positioned on neckline, a bullish trend is finally confirmed when at least 1/3 of the head/shoulder distance is achieved, meaning that bulls are awake as soon as price passes 1260.
Assuming the price will reach and pass 1260, according to Fibonacci retracement, our next target shall be reached at 1268 followed by 1274 & 1283 respectively.
For the moment I remain bullish as my first post and target 1268 as key price, please stay in tune as I’m watching gold carefully and will update my analysis as soon as possible.
Have a great week and best trading for all!
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