Gold Tests Key Support Level

Gold inched higher on Friday during Asian session after finding support near key levels. The yellow metal is being traded near $1220 an ounce. The technical bias remains bullish because of a Higher High in the recent upward wave on the daily chart.

Technical Analysis

As of this writing, the precious metal is being traded near 1220.80. A support may be seen around 1218, the intraday low of yesterday ahead of 1217.86, the low of day before yesterday and then 1207 which is the swing low of the last major downside move as demonstrated in the following daily chart.

On the upside, the precious metal is expected to face a hurdle near $1225, a key horizontal resistance area ahead of $1244 and then $1303 in the long run which is the swing high of the last major upside rally. The technical bias will remain bullish as long as the 1207 support area is intact.

US Durable Goods

The Commerce Department on Thursday said orders for items meant to last three years or more jumped 3.4% last month after an upwardly revised 1.9% increase in March. Economists surveyed by The Wall Street Journal had expected overall orders to increase only 0.7%.

A 64.9% gain in civilian-aircraft orders fueled the April increase. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 0.8% after an upwardly revised 0.1% drop the prior month.

Trade Idea

Considering the overall technical and fundamental outlook, buying the precious metal could be a good strategy if we get a valid bullish reversal candle on the daily chart.

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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