Gold Monthly Forecast – April 2018

The gold prices also continued to range and consolidate for most of the month of March, just like how the price action has been for most of the other instruments as well. There was no threat of any kind of a breakout in any direction for the gold prices and it appeared as though the traders were happy to keep the prices within range for better times ahead. We believe that such better times are unlikely to begin in the month of April and we would not be surprised if the consolidation continues in the month ahead.

Gold Volatile But Within Range

The gold prices have been trading within the larger range between the 1300 and he 1360 regions over the last few weeks and though there has been a lot of volatility between these regions over the last few weeks, there has not been any threat of a breakout. Even in the month of March, we saw that the prices touch either side of the range but failed to breakout. The threat posed by the new tariff plan for the Chinese goods that was announced by the US government led to an increase in risk and uncertainty all around the world and this helped the gold prices to move up.

The gold prices usually tend to rise when the risk in the markets and in the world increases. That is why the funds and investments tend to get pulled out of the stock markets and other markets that carry risk and they get invested into safe havens like gold, silver and the dollar as well. We saw a similar kind of reaction during this period which helped the gold prices to climb toward the 1360 region but as the prices approached this region, the momentum was clearly lacking and it was quite obvious that there would not be a breakout through the highs. This helped to bring in a lot of selling near the highs of the range which pushed the prices lower.

Long Term Traders Have to Wait

This visit to the top of the range was preceded by a period of dollar strength as the anticipation over the rate hikes from the Fed increased. This pushed the gold prices towards the lows of the range. The Fed did hike rates in March but there was no signal for accelerated rate hikes which the market was expecting and this began a period of dollar weakness which helped the gold prices to recover from its lows. So, as we can see, there was no shortage of volatility but there was no momentum in either direction.

We can expect more such price action in the coming month of April. This upcoming month is unlikely to see any new thing as far as the fundamentals or economic data is concerned but what should keep the gold bulls interested is the fact that the risks and the uncertainties surrounding the imposition of the tariffs and the threat of a global trade war continues to reside just beneath the surface. This can rear its head at any point of time and if and when that happens, the gold market would be in demand again and this is the time that the bulls would like to try and generate some momentum in due course of time.

But unless and until a strong breakout and retest happens through the range, it would be difficult to predict the direction that the prices are likely to take and hence the better trade play would be to play the range with a stop loss beyond the range. Considering the length of the consolidation, the breakout, if and when it happens, is likely to be a large one and hence there is still a lot of opportunity for the long term traders and investors.