HelenRush

Gold: a chance to confirm recovery

TVC:GOLD   CFDs on Gold (US$ / OZ)
Gold showed a robust recovery from last week’s 4-month low at $1,236.49. On Thursday, the precious metal posted a 2-week high at $1,268.28 but failed to extend rally on the back of reviving USD demand. Nevertheless, considering that we now see a V-formation on the charts, there is a chance that following the current retreat, gold will not lose its momentum and accelerate higher afterwards.
Despite some local USD demand, the currency will hardly be able to gain any follow-through traction, at least in the short-term, as the US tax overhaul approval failed to impress the dollar bulls. Moreover, there is much skepticism over the tax reform efficiency for the economy and concerns about this plan which would add more than $1 trillion to the federal budget deficit over the next decade.
On the back subdued USD prospects, the precious metal may preserve recent gains and attract buyers again, especially if safe-haven demand which revived a bit today, remains intact. In this respect the results of Catalonia election. If the pro-independent parties do better in the vote, risk aversion may increase and support gold demand. In this case the first bullish target is at $1,264.66.
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