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After analyzing the movements of the gold futures in a daily chart, I find that after testing a new high last Friday at $3536, gold futures found a steep slide before testing a significant support at the 50 DMA at $3378 on Tuesday, bounced back a little today to test the immediate resistance at the 20 DMA at $3411 as the US President Donald Trump has signed an executive order pausing triple-digit levies on Chinese imports for another 90 days.
On the other hand, investors had been on tenterhooks about the inflation data because it followed a surprisingly weak jobs report on August 1and had the potential to stoke concerns about stagflation which is likely to cap the upside of the gold futures while the highly-anticipated US inflation reading indicated President Trump’s tariff regime had yet to filter down to consumer prices.
Undoubtedly, gold futures appear indecisive at this pivotal point, trading in a narrow range from $3378 to $3428, where a breakdown or breakout could define the further direction.
I anticipate that if the gold futures find a breakdown below the immediate support at the 50 DMA at $3378, downside could extend up to $3319, where the gold futures will find support at the 100 DMA.
Inversely, if the gold futures find a breakout above the significant resistance at the 9 DMA at $3428, bulls could try to test the next resistance at $3467, where the big bears will load fresh shorts with a stop-loss at $3546 for a target at $3250.
Finally, I conclude that wobbly moves could be there for another 90 days till the final conclusion of a trade deal between the U.S. and China, as this will provide strong support to the bears to command the scenario.
Disclaimer: Readers are advised to take any position in gold futures at their own risk, as this analysis is based only on observations.