Gold headed back to multi-week highs

After Friday's brief pause, Gold inched higher on Monday and remained closer to nearly five-week high touched last week. 

Currently trading around $1178 level, the precious metal snapped a three-day of winning streak on Friday as the latest reading on the US labor market revived hopes for a steeper Fed rate-hike cycle and weighed on the non-yielding metal. 

On Monday, however, retracing treasury bond yields and a cautious sentiment around equity markets pointed to the prevalent risk-off mood and extended support to the yellow metal's safe-haven appeal. Moreover, a mild US Dollar pull-back from session peak was further seen supporting the bid tone surrounding the metal. 

As we approach Donald Trump's inauguration day on January 20, uncertainty regarding the size and impact of the fiscal stimulus measures might continue to lend support and hence, any weakness might now be seen as a good value buy. 

Technical outlook

Carol Harmer, Founder at charmertradingacademy.com, notes, "There is scope to trade higher to the 38.2 Fib  level of 1187...If we break below 1170 there is scope to go back to the 23.6 fib @ 1162..."

"Daily charts look a bit overextended on the topside and therefore we are looking for the market to have possibly one more thrust higher to sniff this 1187 resistance and then fall....Now obviously if the market makes a break above 1193 then it will be given another boost and we should be able to trade to the 1199/1204 resistance..."

"I would not be worried about longs unless we break 1162 and stay below ere...Then the recent short term uptrend could be over and Gold will continue lower and go back towards the 1146/42 support.."