Technical Analysis: Bullish flag on weekly chart favors gold buyers

Technical Analysis: Bullish flag on weekly chart favors gold buyers

Although gold prices paid a little heed to the Brexit deal announcement and the US stimulus news, bullish flag formation on the weekly play as well as the metal’s sustained trading above 50-SMA keeps the buyers hopeful. That said, the latest consolidation of a bull-run from August 2018 needs to stay beyond the pattern support near $1738. Though, a pullback to the 50-SMA level of $1780 can entertain short-term sellers. Also acting as the strong support are upward sloping trend line from May 2019 and August 2018, respectively around $1620 and $1510. In a case where the bullion breaks the 28-month-old support line around $1510, bears might not hesitate to challenge the early 2019 peak surrounding $1346.

On the contrary, fresh buying will wait for a clear break above the stated flag’s upper line, at $1925 now. Following that, November high near $1965 and the $2000 round-figure may offer an intermediate halt before challenging the 2020 landmark of $2075. It should, however, be noted that the uptrend past-$2075 will aim for the theoretical target of bullish flag confirmation, closer to $3000. Overall, the gold buyers have an upper hand while heading into 2021. However, expected receding of the coronavirus (COVID-19) fears and solutions of the major problems, namely Brexit, US stimulus, may offer initial pullback to the yellow metal.

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