Gold recovers from 8-week low, trades above 38.2% fib
Gold prices fell to an 8-week low of $1220.64 before making a quick recovery to $1232 levels. At the time of writing, the metal was trading just above $1229.51 (38.2% Fib of Dec low - Apr high).
‘Buy the fact’
In gold’s case, what we are witnessing is a ‘buy the fact’ (Macron wins the election) trade. The safe haven metal has been dumped over the last two weeks as the risk assets rallied on hopes that Macron would win the French Presidential elections.
The market friendly candidate came out victorious on Sunday as expected, thus leading to a ‘sell the fact’ trade in EUR denominated assets. EUR/USD jumped to a high of 1.1010 after Macron’s victory only to fall back to 1.0950 levels. On similar lines, gold dropped to $1220.64, before moving back to $1232 levels.
The ‘buy the fact’ trade in gold may gather pace if the profit taking in the stock markets gathers pace during the day ahead.
Gold Technical Levels
The immediate resistance is seen at $1239.88 (Mar 31 low), which, if breached would open up upside towards $1254.71 (23.6% fib of Dec low - Apr high) and $$1261.01 (Mar 27 high). On the other hand, a breakdown of support at $1229.51 (38.2% fib of Dec low - Apr high) could yield a pull back to $1220.12 (Jan 24 high) and $1209.14 (50% fib of Dec low - Apr high).