Gold – strong bounce generates initial reversal signal

Gold jumped over 2% on Monday, lifted by weaker dollar and persisting uncertainty over US-China trade conflict that revived safe-haven demand.

Strong bounce followed repeated failure to register clear break of strong support at $3228 (50% retracement of $2956/$3500 upleg / daily Kijun-sen).

The metal’s price returned above $3300 mark and cracked important resistance at $3315 (10DMA / Fibo 38.2% of $3500/$3201 bear-leg) to generate signal that corrective phase from new all-time high may be over.

Reversal signal is developing on daily chart, as 14-momentum bounced into positive territory after touching the centreline, daily MA’s are about to turn to full bullish configuration, while today’s large bullish candle contributes to formation of reversal pattern.

Ability to hold above $3300 would keep near term bias with bulls, and daily close above $3315 to validate signal and open way for further recovery and expose targets at $3351 / $3386 (Fibo 50% and 61.8% retracement of $3500/$3201 respectively).

Markets will keep a close eye on development of US-China case and will also look for fresh signals about Fed’s monetary policy trajectory, as the FOMC meets this week and will announce its rate decision late Wednesday.

Res: 3328; 3351; 3370; 3386
Sup: 3300; 3272; 3228; 3201