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Gold in no-man‘s land

With a current price of 1,228 USD per troy ounce, gold went up by around 7% since the beginning of the year. 

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As a result, the precious metal managed to clearly outperform indices such as the S&P 500 (+5%), the Dax (+4%) and the SMI (+3). However, the gold price is currently in no-man’s land. It seems that since the beginning of February the bulls and bears have found their balance. Since then, the price continues to hover around the 1,230 USD per troy ounce mark. It is significant that both the 200-day and the 252-day (exponential) moving averages are exactly at this level. After the Supertrend indicator turned into an uptrend already at the beginning of January the Ichimoku analysis shifted to an uptrend in mid-February (see chart below).

Upward scenario – potential up to 1,375 USD per troy ounce

However, to continue the uptrend, gold must first break above the resistance zone of 1,237-1,249 USD, where among others the 61,8% Fibonacci Retracement Level of the November 2016 - December 2016 move (1,237 USD) as well as the 50,0% Fibonacci-Retracement Level of the July 2016 - December 2016 move (1,249 USD) can be found. This will then open up a way for the gold price to rise to 1,280 USD and 1,307 USD (November 2016 (pre-election) high) per troy ounce. In addition, this upward trend could continue up to 1,375 USD (July 2016 high).

Downward scenario – potential up to 1,050 USD per troy ounce

If the gold price falls below 1,205 USD per troy ounce, there is a greater probability of a downward scenario. At this level both the Supertrend indicator and the Ichimoku cloud can be found at the moment. At the same time, this is also – on the basis of the current gold price – the level of twice the ATR (the 14-day average true range currently at 11.5 USD). If this level were to be broken down, that would mean that the major downward trend would continue. A price fall to 1,120 USD (December 2016 low) and further to 1,050 USD (December 2015 low) could be possible.

Conclusion

The current trading range of 1,205 – 1,249 USD per troy ounce offers no trading signals. But with a gold price above or below these levels two scenarios with a good potential arise. However, what needs to be taken into account is (as is so often the case these days) the uncertainty factor Trump. Therefore, an efficient risk and money management remains essential.

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