Gold continues to remain sluggish in the absence of any major economic data and is trying its best to cling to $1300 levels. A slump in the demand, easing tensions between the Ukraine and Russia and a strong housing report are the major reasons that the precious metal is consistently forced to stay sub-1300. Gold is currently trading down 0.2% at $1297.30.

Gold Spot, Hourly

Gold Spot, Hourly

From a technical perspective, Gold is in a downtrend. As can be seen from the hourly Spot chart, the precious metal failed to sustain the thrust received from the geopolitical tensions in Iraq and broke below the key support line. The prices have primarily been moving in a lower-top lower-bottom structure and present a perfect opportunity to go short in this counter. 1302-1305 can now act as a fresh supply zone and any rise towards 1300 must be used to go short in this counter with a stop-loss placed just above 1305 on an intraday basis. The target for the short trade is the support level of 1287, a point at which some long positions may also be considered. The target for the long trade will be 1300 with a stop-loss placed just south of 1280.   

Traders and investors must follow the Fed’s July policy meeting’s minutes, to be released on Wednesday, to look for clues that might affect the yellow metal. Geopolitical scenarios should be watched carefully as the safe-haven appeal of gold diminishes if the fears wane off. Fed chair Janet Yellen’s first Jackson Hole meeting as the Fed Chairperson, to be held from 21st Aug-23rd Aug this week, will also be scrutinized by the market participants for a clearer picture regarding the timing of the interest rate hikes. Any adverse indication could roil the global markets and bring the glittering metal back in flavor. 

By: Nikhil Gupta, Financial markets Researcher/Analyst