The price of gold recorded more than $30 increase during the last week of 2016, rallying the yellow metal to more than $1160 an ounce as bulls gain strength. The technical bias remains bullish in long term because of a higher high in the most recent upside rally on weekly and monthly timeframes.
As of this writing, the precious metal is being traded around $1161 an ounce. An immediate hurdle can be seen near $1200 which is the confluence of psychological number as well as horizontal resistance area as demonstrated in the given below weekly chart. A break and weekly closing above the $1200 resistance shall incite renewed buying interest, validating a move towards the $1240 resistance area – another critical resistance level on higher timeframes.
On the downside, the yellow metal is expected to find a support around $1156, a key horizontal support area ahead of $1122, the swing low of the last major downside wave and then $1100, the psychological level. The technical bias shall remain bullish in long term as far as the $1046 support area is intact.
China’s Manufacturing Data
There are some key economic news scheduled next week that might impact the price of gold and one of them is the china’s manufacturing data. The Caixin China is scheduled to release the manufacturing data next week. Generally speaking, a better than expected manufacturing PMI figure from China is considered positive for Gold and vice versa. Needless to mention, China is the largest buyer of Gold and other precious metals so a better than expected manufacturing figure hints at increased manufacturing productivity in the world’s second largest economy which consequently boosts its annual GDP. In regards to major fundamental events and their impact on the financial markets, Investoo recently launched some good video tutorials on its website.
Considering the overall technical and fundamental outlook, buying the precious metal on dips appears to be a good strategy in short to medium term. The above mentioned support levels may be good entry points to take long positions.