Gold keeps firmer tone but trading within a narrow range and under key barrier on Thursday, as traders remain cautiously optimistic about still fragile ceasefire in the Middle East.
Wednesday’s immediate reaction on announcement of a ceasefire between the US and Iran was strong (gold price spiked to $4857, the highest since March 19) but short-lived, as the price subsequently dropped and closed at $4719, leaving Doji daily candle with long upper shadow that indicates indecision but also building offers.
Near-term price action continues to trade between two key boundaries at $4603 (broken Fibo 38.2% of $5419/$4099, acting as support) and $4759 (50% retracement, marking strong resistance) but remains in the upper side of the range and above 100DMA ($4671) that keeps near-term bias bullishly aligned.
Daily studies also provide slight optimism, as the price holds above 100DMA for the sixth consecutive session, converging 10/100DMA are about to form a bull-cross and 14-d momentum has returned to positive territory, while gradually ascending RSI is in neutrality zone).
Bulls need to register a clear break of $4759 Fibo barrier to generate signal of continuation of bull-leg from $4099 (March 23 spike low) that will expose targets at $4915/36 (Fibo 61.8% / daily cloud base) and $5000 (psychological) in extension.
On the flip side, 100DMA offers solid support, ahead of $4600 zone, loss of which would sideline bulls.
However, geopolitical situation is likely to make the biggest contribution to the near-term price direction, with further weakness of the dollar to continue to underpin the yellow metal’s price.
Res: 4759; 4800; 4857; 4915.
Sup: 4700; 4671; 4603; 4553.
