Gold: Ahead Of BOJ & FED, What's The Chart Is Saying ?

Gold need to sustain above 1285-1295-1310 for further rally up to 1345-1392-1435; otherwise it will come down and sustain below 1250-1235 zone, it may fall up to 1190-1135-1039 zone again.

Trading Idea: Gold

CMP: 1250

Either sell below 1250 or on rise around 1285-1300;

TGT1: 1225-1190*-1163-1135 (1M)

TGT2: 1095-1075-1050-1039* (3M)

TSL> 1310

Note: Consecutive closing (3 days) above 1310 for any reason, Gold may further rally up to 1345-1360-1392 & 1435 in the near to long term (alternative bullish case scenario from the current trading level).

March may be called the month of the central bankers and in the coming week, apart from BOJ & FED, there will be SNB and BOE:

BOJ: Expected to maintain the statusco as it just lowered the rate to negative zone in Jan'16 to (-) 0.01%.  BOJ is under immense pressure domestically for this sudden NIRP and may revise the the cut off CA balance above $90 bln and no fresh QQE until July'16.

FED: Expected to be on "Hold" with a "slightly hawkish" script and keep probability of another rate hike @0.25% in July & Dec'16. FFR is now indicating 50% & 70% probability of a hike in July and Dec'16 on the back of recovery in stock market ( S&P rallied by around 12% from the recent bottom), decline in $ index (USD), blockbuster job data (although quality of jobs may be debatable), rise in oil prices (which may stimulate overall inflation towards 2%). But as ECB already eased in an unexpected and extraordinary manner, FED may keep its "wait & watch" policy with a "hawkish" stance in order to justify its previous hike.

Crude Oil is expected to be in the $40-30 zone in the near term as there will be frequent talk of production cuts, but near $40, more supplies (specially US shale) can come to the market also. Thus there will be no real improvement in demand-supply dynamics and all round production cuts, even by 5% may be a dream and stable Oil around $35 is a less cause of concern for the equity market as it may de-link itself with the present co-relationship. 

Thus the present divergent QQE/monetary policy between FED and other major central bankers (ECB/BOJ/PBOC) may keep the differential between the cross currencies intact and USD is expected to be remain in strength wrt to EUR & JPY. This will make the Gold relatively weak in USD terms in the near term.

But, in this era of competitive currency devaluation and negative yields, thanks to QQE/ZIRP/NIRP etc, appeal of Gold will be there as a physical asset for at least positive yield/return in the mid to long term.

Analytical Charts: