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Gold has largely benefitted since China first devalued its currency on August 11th. Gold has reached our anticipated target area of $1150/ troy ounce and beyond to trade as high as $1168/troy ounce, testing key resistance at the level.
Over the last two days of market turmoil, Gold has been able to hold steady thanks to some safe haven bids, while other commodities declined over concern on China. However, that has clearly not been enough for Gold to break above its key resistance area of 41170/troy ounce.
With return of Risk-on theme, which is showing some signs of comeback, gold might decline from current level or consolidate with downside bias.
With above view, we expect Gold bulls to search for support even if they succeed breaking the key level going ahead.
Trade idea
- Gold is likely to decline towards $1125/troy ounce area in search for support. A decline further towards $1108/troy ounce can't be shrugged off as of now.
- Focus is on key resistance area around $1170/troy ounce and further movement in equity markets across world.
Gold is currently trading at $1152/troy ounce.
