The Manchester explosion and the resulting risk-off pushed gold to a three-day high of
$1263.46 levels.
The session high almost coincides with the critical 61.8%
fib retracement of the April low and the March high - $1264. 50.
The Greater
Manchester Policy is treating the explosion as a terrorist incident
until they know otherwise. UK PM May has condemned the blast and said they are
working to establish the full details of the incident.
Meanwhile, Trump administration has proposed major cuts to
social spending program and massive tax cuts that will boost the economic
growth. However, the plan is likely to be rejected by Congress. Hence, the
proposal has not had any impact on the yellow metal. Furthermore, the CME
FedWatch’s June rate hike probability stands unchanged at 78.5%.
The metal may remain well bid and could jump above $1264.50
(61.8% Fib R) if the European stock markets react negatively to Manchester
incident.
Gold Levels To Watch
The metal was last seen trading around $1262/Oz. A break
above $1264.50 (61.8% Fib R of Apr low - May high) would open doors for
$1274.07 (Apr 19 low) and $1278.11 (78.6% Fib R of Apr low - May high). On the
downside, break below $1259.50 (session low) could yield a pull back to
$1252.53 (50-DMA) and $1243.65 (100-DMA).
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