Gold prices started the trading week 0.3% higher following the deadly London terror attack on Saturday that had seven people killed and 48 injured. The attacks come days before the National elections and after the UK government downgraded the country’s threat level to “severe” from “critical”. Prime Minister May urged for tougher measures to fight extremism.
Demand for safe-haven assets have been steadily rising in 2017 until the French election results calmed markets. Price action on the gold daily chart shows that the bearish Gartley pattern that formed on April 17th ended on May 9th. Point D was confirmed just ahead of the 70.7% Fibonacci retracement level of the X to A leg and the 141.4% Fibonacci expansion level of the B to C leg. Price has now recaptured all three key SMA(s) and is facing critical resistance from the $1,300 to $1,3020 zone. Initial support will come from the 200-day SMA, which currently trades around the $1,245.60 level. Major support lies at the $1,214 level.
The trade: Sell Gold at $1,300 with a stop loss at $1,310 and a take profit at $1,270. The Risk/Reward Ratio is 1:3