“In investing, what is comfortable is rarely profitable” – Robert Arnott
Economic releases have been on the quiet side this week, subduing most volatility and market movements – especially towards Gold. It was a rather uneventful week, with Gold opening around 1784.55, a high of 1793.13, and a low of 1772.34 – giving traders a weekly potential of around 215 pips in total volatility for the week, which is common in points of consolidation.
All eyes are looking towards today (Friday) at 15:30 SAST for CPI data release. The last time CPI was released, the bulls in Gold took over, moving over 300 pips on the influence of the result. With asset tapering and interest rates being the main tool to combat inflation, investors have remained cautious with not many big decisions being made as there is a policy meeting next week to provide further clarity on what the FED will do.
Even with the above being considered, the Omicron variant remains a strong reality, and investors, traders expect more to come. We are experiencing a very unprecedented time with the precious metal as the scales are balanced with technicals and fundamentals.
Compared to our previous article on Gold, not much has happened – mainly due to the above fundamental explanations – but the technical aspect is very inviting for traders currently. Gold has been respecting the ascending triangle, reacting to around 5 resistance points on the upper trendline, and around 3 support levels on the lower trendline.
The ascending triangle harmonic pattern, coupled with strong Fibonacci levels (61.8%) has been increasing investors’ anxiety as a breakout or breakthrough of these levels (with fundamental sentiment) could provide a huge opportunity with conservative risk over reward ratios. We have also indicated a 4H trendline, providing strong support with price still respecting the level.
Patience is important in these situations as fundamental releases provide traders with a medium to long term view, but technicals provide them with optimal entry points.
**Disclaimer: This cannot to be construed as advice, it has been compiled purely as a guideline to responsible trading. Trade responsibly as your capital is at risk**