Gold price bounced on Tuesday and returned above key $3000 level, partially offsetting initial negative signal on violation of this support on Monday and threats of deeper pullback on clear break lower.
Profit taking after a steep fall in past three days, which was mainly driven by closing profitable gold longs to cover losses from sharply falling stocks and attempts to regain its safe haven appeal in situation of strong risk aversion, inflated metal’s price.
As mentioned in previous comment, reaction on $3000 level will be crucial for the near term direction, with downside risk still present despite today’s bounce.
Markets await more news about potential negotiations about tariffs after more than fifty countries contacted US administration for a ‘peace talks’, while unstable economic and geopolitical situation continues to provide support for safe haven assets.
Technical picture slightly improved on daily chart, with oversold conditions adding to hopes of further recovery, but countered with still negative momentum.
Potential close above $3000 could provide temporary relief, however more work at the upside will be required.
Break and close above $3037 (Fibo 38.2% of $3167/$2956 / 20DMA) would brighten near term picture and boost expectations of further recovery, while failure here but ability to hold above $3000 would keep hopes of recovery alive, but fragile.
The negative scenario sees attempts above $3000 as a false break which would keep the downside vulnerable of deeper correction towards targets at $2911/00 (Fibo / psychological.
Res: 3017; 3037; 3050; 3061.
Sup: 2978; 2956; 2926; 2911.
