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Gold price analysis: Will the political unrest between China and Hong Kong be the catalyst for higher Gold?

Gold Price Analysis: There is scope for mild selling to retest the breakout level. This offers a solid bullish set-up. Will the political unrest between China and Hong Kong be the catalyst?

Market highlights of the past week

Friday May 15: Demand for precious metals remained strong on Friday amid underlying concerns over US-China relations. Extremely accommodative central bank policies and upward pressure on budget deficits were also major factors boosting demand

Monday May 18: From fresh seven-year highs around $1,765 per ounce, gold retreated to lows around $1,730 while silver dipped sharply from highs around $17.70 per ounce

Tuesday May 19: Gold secured net gains to just below $1,750 per ounce and held just below this level on Wednesday with markets eyeing seven-year highs while silver was just above the $17.50 per ounce level

Wednesday May 20: Precious metals were underpinned by a weaker dollar on Wednesday but demand was stifled by robust risk appetite amid pressure for a correction. Gold selling interest above the $1,750 per ounce level was also a significant factor

Thursday May 21: Precious metals lost ground on Thursday with underlying pressure for a correction after strong gains and profit taking after failing to break to fresh seven-year highs

Gold price analysis

Let us have a look at the technical viewpoint: 

Monthly: Trades to the highest level in seven years. We have seen a slight pause in bullish price action with levels above the 78.6 per cent pullback of 1734 finding profit taking.

Weekly: Holds within a large bullish channel formation. Trend line resistance is seen at 1950, support at 1484

Gold Price AnalysisDaily: Broken out of the triangle formation to the upside. This can be seen as a flag formation. There are two possible measured moves, 1837 and 1950. The reverse trend line support is located at 1710. Breakouts are often retested

Gold Price AnalysisOutlook: There is scope for mild selling to retest the breakout level. This offers a solid bullish set-up. Will the political unrest between China and Hong Kong be the catalyst? 

Possible trade set-up

Action: Buying at 1710

Stop: 1690

Targets: 1830, 1940. 

Potential return on risk to first target:  R6 (reward 120/risk 20)

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