Gold prices started the trading week slightly higher following last’s week slide that took price below the 200-day SMA. On Friday, the Fed released their Semi-Annual Monetary Policy Report. The central bank told Congress that the US economy will strengthen and that further rate hikes are on the way. The Fed also noted that financial system vulnerabilities remained modest and that the economy grew at a moderate pace over the first half of the year.
Gold remains near 4-month lows and that could accelerate if we see the chances of a September rate hike increase over the next month.
Price action on the gold daily chart shows that the double-top pattern on Jun 6th is still valid. Last week’s breaking of the 200-day SMA is finding tentative support from the psychological $1,200 level. Price is now facing key support from the $1,180 level. If we see that level breached, support will come from $1,150 level. Major support lies at the $1,100 to $1,124 zone. Key resistance remains the 200-day SMA, which trades at the $1,236 level.
The trade: Sell Gold at $1,225 with a stop loss at $1,185 and a take profit at $1,235. The Risk/Reward Ratio is almost 1:3