Gold Price Outlook: XAU/USD Probes a Seven-Year High - More to Go?
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Gold Price (XAU/USD), News and Chart
- Bullish pennant breakout, further gains eyed.
- Fundamental background remains supportive for gold.
Gold (XAU/USD) Breaks Trend Resistance
Gold continues to break higher, despite a strong US dollar, with a well-known chart set-up looking like it is driving the move higher. While the fundamental backdrop remains unchanged, the technical set-up continues to look bullish and a trade and close above the $1,611.5/oz. will see gold trading at its highest level since March 2013.
The coronavirus continues to spread, with over 75,000 people infected with more than 2,000 fatalities. The potential economic effect is starting to be seen with Apple warning on Monday that it will fail to meet quarterly forecasts due to supply problems and weakening global demand. This weakness is expected to trickle down to Apple suppliers across the supply-chain.
This weekend we looked at gold and highlighted the bullish pennant pattern on the daily price chart. Trend resistance has now been broken and if the pattern plays out, higher prices are expected in the short- to medium-term. Traders should note the latest FOMC minutes released at 19:00 GMT today which may steer the short-term direction of the US dollar.
Gold Weekly Forecast: A Growing Case for a Range Break
The next level of resistance at $1,611.5/oz. is close by and a break and close above here would suggest that gold has further to rally. The next level of resistance on the chart cuts across around $1,685/oz. – the February 2013 monthly high – before a longer-term potential target around $1,796/oz. Trend resistance at $1,583/oz. now turns to support. Gold trades above all three moving averages, a bullish signal, but is also overbought using the CCI indicator which may slow down any short-term move higher.
Gold Daily Price Chart (April 2019 – February 19, 2020)
Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.
What is your view on Gold (XAU/USD) – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.