Gold prices continued to respect the $1,378 level despite Friday’s retail sales miss and disappointing consumer sentiment figures. Gold rallied as high $1,362 but have now settled back towards the $1,342 area. Consumers used their money on vehicles in July but not on much else as retail sales came in flat, much lower than the expected 0.4% gain.
Confidence inched upward to 90.4 in early August due to more favorable prospects for the overall economy offsetting a small pullback in personal finances, but the gain was less than the forecasted rise of 91.5. Most of the weakness in personal finances was among younger households who cited higher expenses than anticipated as well as somewhat smaller expected income gains. Concerns about Brexit have faded amid rising references to the outcome of the presidential election as a source of uncertainty about future economic prospects.
Price action on the gold daily chart shows that the bullish rally accelerated after price rallied above all three key (200-, 100- and 50-day) SMAs. Price has now tentatively respected a double-top pattern just above the $1,370 level. If price is unable to advance above the $1,378 level, we could see a major pullback target the $1,320 region.
If bullish momentum returns, key resistance will come from the $1,400-1,450 zone.
The trade: sell Gold at $1,350 with a stop loss at $1,360 and a take profit at $1,320. The Risk/Reward Ratio is 1:3