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Gold- Fundamental Vs Technical Analysis

Fundamental – Greece and FOMC dictating the equation

The precious metal is holding on its gains on the back of the Greece saga as the contingency fear are mounting. The bond yields for the Spanish and the Italian bonds are soaring, as the Greece default scenario gazes more likely and both sides have embraced the most childish behavior ever by blaming each other.

Another 400 million euro has evaporated from the Greek bank deposits and gold investors are paying very close attention to this situation. Traders so far have been immune to this Greek default situation, but now it is becoming more real and require the solemn attention of the policy makers before the entire situation gets out of hand which could really push the metal higher.

The significant factor remains the FOMC meeting, which will take place later this week and any hawkish behavior could bring a rally for the dollar, which could push the gold price lower. The two important factors during the FOMC meeting will be their guidance- i.e is Yellen remains elusive with respect to rate hike or she draws a firm deadline when the rate will rise. Finally, it will be their growth forecast which will matter. Again a bullish outlook will be positive for the dollar and negative for gold.

 

Technical Analysis

The technical analysis shows that we have formed a symmetrical triangle pattern which usually breaks in the direction of the current trend which is towards the downside. However, if the 50day MA (shown in yellow) crosses the 100 day MA (shown in red) crosses from below, it will show that the momentum has changed its direction and the bias will be towards thee upside.

The MACD indicators is trading in line with the price action which means as the price is making the higher high, the momentum is behind this so the bias does remain towards the upside.

Gold 16-6-2015



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