Last week saw Gold trading in a tight range as the market waited for the comments from Fed Chair Yellen and ECB President Draghi. As Yellen did not give any clues of the monetary policy, Gold prices rose on Friday. Therefore the main fundamental factors diving the price of Gold at this time around are the fundamentals of US Dollar.
As the economic data from US has been generally weak, US Dollar has extended its losses across the board. However, on the technical side, we have to note that Gold did not rise as much as EURUSD. EURUSD rose to higher levels which were last seen in 2015. Gold also failed to close the week above 1300, which has recently shown massive resistance.
There is also another factor which may prevent further gains of price of Gold. Tax reform, which is likely to be the major influence on gold prices this week. This could be bullish for U.S. stocks, Treasury yields and the U.S. Dollar, so gold price gains may be limited or prices could even decline.
Therefore we will be watching if Gold can break above 1300 level or if it can break below the low of last week which is around 1275 level. Above 1300, and a weekly or even a daily close clearly above 1300 is bullish, while below 1275 opens the possibility of 1250 level.
