Will gold recover quickly after Friday's selloff ?(With Trading Strategy)
Gold prices dropped to their lowest in 1-1/2 months on Monday morning. Washington fortified for Biden's inauguration amid fears of more violence.

Gold prices dropped to their lowest in 1-1/2 months on Monday and rebound later asprospects of a massive U.S. coronavirus relief aid outweighed a stronger dollar and lifted bullion's appeal as an inflation hedge.
The spot gold rose 0.53% to 1835.36 per ounce by 15:50(GMT+8).
"The gold market remains relatively supported at these levels, as the current run of the U.S. dollar has more to do with safe haven, rather than a discernible pivot to a stronger dollar," said Stephen Innes, chief global market strategist at Axi.
"The U.S. stimulus (plan) is quite large, we're going to get around $1.9 trillion or $1.5 trillion, and either scenario is good for gold," Innes said.
The U.S. dollar hit a four-week peak against rival currencies, making gold expensive for holders of other currencies.
U.S. President-elect Joe Biden last week unveiled a $1.9 trillion stimulus package proposal to jump-start the economy and said he wants 100 million COVID-19 vaccine shots during his first 100 days in office.
Although U.S. inflation expectations have risen in anticipation of more U.S. fiscal stimulus, gold has not been the sole beneficiary, bond yields have risen and weighed on gold, Phillip Futures said in a note.
"Our market view remains bullish for the long term as the U.S. dollar is expected to remain structurally weak in the long term."
The U.S. Treasury yields scaled a 10-month high last week.
Photo: BUSINESS INSIDER
Local and federal officials in the city of Washington, DC, are on high alert ahead of this week's inauguration of President-elect Joe Biden.
Fears stem following the deadly insurrection earlier this month at the U.S. Capitol led by supporters of President Donald Trump.
From non-scalable fencing around the U.S. Capitol to the closure of the National Mall and streets in downtown D.C., the photo shows the unprecedented measures officials are taking to ensure the presidential transition occurs smoothly.
Photo: KITCO
Wall Street voters, comprised of analysts, were split between gold heading lower and sideways this week, and only the minority saw gold prices heading higher. Breaking down the results, out of 16 Wall Street votes, 37.5% saw lower prices, 37.5% were neutral, and 25% were bullish for next week.
Analysts also cited a bear flag pattern developing, which is a sign that more losses could be ahead. "An ominous bear flag pattern has formed on the daily bar chart, [which is why] I am steady-to-lower next week," said Jim Wyckoff, Kitco's senior analyst.
The same worries were not reflected in the Main Street part of the survey as a clear majority still saw prices heading higher next week. Out of 1,701 votes, 54.4% saw higher prices, 21.9% were neutral, and 23.7% saw lower prices next week.
"Gold headed lower on a stronger dollar and weak technicals. Going back through 200-day moving average as a rally in the first half of the week fizzled. A break of $1,800 could test the end of Nov low near $1,765. That is roughly 50% of the rally off last March low. If that goes $1,690-$1,700 comes into view," said Marc Chandler, managing director at Bannockburn Global Forex.
Investors should be paying attention to the technical levels next week, advised Michael Moor, founder of Moor-Analytics.com.
"I am bearish going into next week but would be wary of lower time frame possible exhaustion levels below at $1,809.0-04.4 and $1,773.2-63.5. There is a higher timeframe (major) exhaustion further below in the $1,690.5-40.5 general area," he said. "The consolidation itself has a bullish formation across the top and a bearish formation across the bottom. So, we will either continue lower and take out the formation below."
If $1,825 an ounce is lost next week, the gold market could be looking at $1,800 and then $1,775, which is the primary line in the sand, said Peter Hug, Kitco Metals' global trading director.
However, Hug added that he sees a move below $1,800 as an unlikely one next week, remaining constructive on gold.
"Short-term economic perspective still looks troubling, which is why people are scared and are back to raising cash. The market is vulnerable. But I am looking for $1,825 to hold as support. Once Biden gets in, and money starts to flow, I am very constructive the metals," Hug said.
Many of the neutral votes for next week saw gold as stuck in a wide trading range between $1,800 and $1,900 an ounce.
"Investor confidence remains strong, keeping a headwind in front of gold. Investor focus in the coming week is likely to be more on U.S. earnings and maybe the inauguration than the ongoing vaccine/lockdown tug-of-war," said Colin Cieszynski, chief market strategist at SIA Wealth Management. "The three central bank meetings of the coming week appear unlikely to bring in new stimulus unless the Bank of Canada surprises everyone."
Those who remained positive for next week saw Friday's drop as a temporary one and didn't cite higher yields as a major problem for the precious metal.
"Analysts say that rising rates are bad for gold. But rates barely nudged up—from 0.096% to a peak of 1.05% on the one year and are now back lower than they were before the 'move' started. Besides, it's real rates that are important for gold, and real rates remain negative," said Adrian Day, president and CEO of Adrian Day Asset Management.
Day added that the fundamentals for gold remain very positive. "There's increased spending by the new U.S. administration and Fed accommodation of that spending, a pattern reflected around most of the developed world. Gold flourishes win times of greater global liquidity," he said.
Trading Strategy (source: Trading Central)
Pivot: 1825.00
Our preference: long positions above 1825.00 with targets at 1845.00 & 1857.00 in extension.
Alternative scenario: below 1825.00 look for further downside with 1816.00 & 1810.00 as targets.
Comment: the RSI advocates for further advance.
Supports and resistances:
1864.00
1857.00
1845.00
1835.10 Last
1825.00
1816.00
1810.00
Guideline for Trading Central strategy
Trend chart reading guideline
1. First look at the time period in the upper left corner of the chart: ·30MIN and 1H chart shows the trading suggestions for intraday ·Daily chart shows the market trend analysis in next 2-3 days
2. The blue horizontal line on the chart marks the pivot: pivot indicates the reversal of the market. When the price is above the pivot, it indicates an upward trend, when the price is below the pivot , it indicates a downward trend. When the price breaks through the pivot, the trend is reversed.
3. The red and blue thin curves in the Candlestick chart chart are technical indicators: Red line is MA20+Bollinger bands, Blue line is MA50. under the Candlestick chart chart are also the technical indicators: Blue line is RSI, Red line is 9MA;
4. The green horizontal line is the resistance level for a price increase, and is also the profit target for long orders; the red horizontal line is the support level for a price decrease, and is also the profit target for short orders.
How to use TC strategy?
1.[Pivot] is the reversal line of the market trend. When the price up the pivot line which means in Bullish, you can open a long position or Buy. on the contrary, when the price under pivot line which means in bearish. You ‘d better make short positions or Sell.
2. [our preference] is the main trading suggestion for your reference. You can exit your trading refer to this target or close positions before it.
3. [Alternative scenario] is the plan B for your reference.
4. [Comment] is the technical analysis of market trends and technical support for trading strategies.
5. [Supports and resistance] Supports are levels where the price tend to find support as it falls.
Resistances are levels where the price tend to find resistance as it rises. So, exit before the trend reverse.
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