Gold Headed for Fifth Straight Weekly Gain

Following Tuesday’s brief pause, Gold resumed its bullish momentum and rose to a weekly high level of $1335 on Friday. The yellow metal inched higher on Friday for third consecutive day and now seems all set to post fifth straight weekly gains.

Gold has been benefitting from a broadly weaker US Dollar on diminishing prospects of a Fed rate-hike in the near-future. Adding to this, looming uncertainty surrounding last week’s Brexit referendum further boosted appeal for safe-haven assets and has been the key driver for the precious metal’s up-surge in last two weeks.

Despite of its recent pull-back from nearly two-year high level of $1358 touched last week, the metal still posted second-straight quarterly gain, summing-up to nearly 25% of appreciation in the first half 2016.

Following last week’s historic UK-EU referendum vote to leave the European Union, markets now speculate that major central banks might now be forced to ease further to support growth. BOE Governor Mark Carney on Thursday clearly pointed to possibilities of a rate-cut in next few month months in order to safe-guard UK economy from the Brexit-led fallout. Moreover, investors have also scaled back prospects of further Fed rate-hike in 2016 in wake of Britain’s vote to end its membership with the European Union. As indicated by CME group’s Fed Fund futures, traders are now pricing-in only 9% chances of a Fed rate-hike in 2016.

Going forward, Gold would continue to be the major beneficiary of the ongoing worries over the political, financial and economic uncertainty surrounding Britain’s vote to leave EU, which now seems to keep global risk appetite under check. Investors are titled to allocate more money into the yellow metal during turbulent market conditions. Moreover, a gush of additional liquidity infusion by major central bank will be further supportive for higher Gold prices in the coming months.

 Technical outlook

Although the ongoing up-move seems to be lacking strong momentum but a fresh bout of buying interest has the potential to boost the metal back towards retesting Brexit day’s swing high level of $1358, which if conquered would open room for further near-term appreciating move. Above $1358, gold could be headed towards $1370 resistance ahead of its next major resistance around $1390 level, marking March 2014 highs.

Meanwhile, a profit taking move below $1325 immediate support now seems to set-in a near-term corrective move that could drag the commodity back towards $1300 psychological mark. Below $1300 support, the corrective move could further get extended towards 50-day SMA support around $1260 level, with intermediate support near $1275 area.