Gold extended a downside movement on Monday during the Asian session, dragging the price of the yellow metal to less than $1320 an ounce following the speech by the Federal Reserve head Jannet Yellen. The technical bias remains bullish because of a higher high in the recent upside rally.
As of this writing, the precious metal is being traded near 1317 an ounce. A huge support can be noted around $1310, the swing low of the latest major downside move ahead of $1300, the psychological number. A break and daily closing below the $1300-$1310 support area could incite a renewed selling interest, validating a move towards the $1260 level.
On the upside, the precious metal is likely to face a hurdle near $1342, the intraday high of Friday ahead of $1350, the psychological number and then $1367, the swing high of the latest major upside rally. A break and daily closing above the $1367 support area could open the door to $1390 and then $1400. The technical bias will remain bullish as long as the $1310 support area is intact.
At the Jackson Hole Symposium on Friday, Ms. Yellen said concerns that the economic growth has eased, and that the possibility of an interest-rate increase will continue to be influenced by economic data.
“In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal-funds rate has strengthened in recent months,” Ms. Yellen said in prepared remarks.
While Ms. Yellen’s comments leave the door open to a rate increase in September, many remain skeptical that the Fed will raise interest rates in the near term.
Considering the overall technical and fundamental outlook, buying the precious metal around the current levels appears to be a good strategy if we get a valid bullish reversal candle in the daily chart.