GOLD: Bulls, Bulls And More Bulls!!!
Following on from last weeks article, the pullback to the 1215.00 zone played out as expected with bears unable to close last Wednesday's candle below this level. Gold has been holding a tight range ahead of the US mid-term elections as investors are sitting on their hands waiting to see how it plays out. Opinion polls strowing a strong chance that the Democratic party will win control of the house of representatives, should this happen we can expect pressure on the Dollar and a move higher for Gold. A bullish breakout from this range will see my initial target of 1245.00 being met first, followed by the 1260.00 resistance level.
From a contrarian perspective, there are factors that could weigh heavy on Golds upside potential. Profit taking after last weeks rally put slight pressure on Gold. Republican control over the House and Senate would also likely create selling pressure. Although the December interest rate hikes should already be priced into the market Gold will have difficulty rallying around this time, that is something for us to be aware of in the near future with a potential short-term reversal for the Commodity. Should price break below the current range we may be looking for a confirmed head and shoulders pattern with potential shorts in play.
Written by Sam Moore (Instagram: @Moore_FX)