As of the beginning of April, Russian gold purchases had the biggest increase in six months, bringing their reserves to 39.8 million ounces from 38.8 million. The news of improving demand from the fifth biggest gold holder did not help price rally.
Early in NY, gold prices were down .87% to $1,192.60 an ounce by 10:38 AM EST. Price action on the gold daily chart shows that bearish momentum returned after making a one-month high at $1,224.50. The current daily candle appears poised to close below the 50-day SMA, which is trading at the $1,195.30 level. Further support may target the $1,167 region.
It is around that area that we could see a bullish butterfly pattern form. If U.S. dollar strength remains robust, further downward pressure may target the $1,150 area. To the upside, $1,210 and $1,250 will serve as key resistance levels. If price does have a daily close above, $1,250, we may see a clear path towards $1,300.
The trade: Sell Gold at $1,197 with a stop loss at $1,207 and a take profit at $1,167. The Risk/Reward Ratio is 1: 3
Edward J. Moya
Senior Market Strategist