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Gold’s weekly outlook: May 13-17

TVC:GOLD   CFDs on Gold (US$ / OZ)
Gold continued to consolidate in $15 range but this time the expansion was on the upside unlike the previous weeks, finally closing with gains of $7. The uptrend was halted as the price action created a double top formation directly inverse to previous week’s double bottom formation which continue to suggest the trend still remains bearish in-spite of favorable fundamentals which failed to keep the price at higher levels.

On the chart –

Gold remained rangebound unable to break through the flag even after having a fairly good week after nearly a month. The closing still remains the key indicator of a bear market consolidation given the price action. We have 2 scenarios –

1. Bulls still remain on sidelines as they failed to build on the gains.

2. Gold closed below the support, till this is respected it can move towards $1284. If this is taken out it can fall to $1273. And if this is breached it can slide towards $1260.

Bullish views remain dull unless gold breaks through the flag on upside.

Bearish view – Bears were able to to bring the price down from highs comfortably with fundamentals mostly against them indicating the metal is having selling pressure at the highs. For bears to continue having the trend in their favor they need to stop the price from breaking out from the flag with next major support seen near $1236-$1240.

On larger terms, Gold continues to remain bearish and prices are expected to head lower.

Possible trades are on both sides, gold can be bought once it breaks out of the flag or at the bottom of the flag/channel.
Gold can be sold under $1277 for the targets of $1273 and $1260 with a stop loss placed above $1289. Longer term target $1248.
A sell-on-rallies can be useful under current scenario.
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