Gold Price Forecast: Looking to Punch Through Chart Resistance
Gold Price, News and Chart
- Chinese flu, US dollar weakness fueling gold’s push higher.
- A confirmed break higher and gold’s upward momentum may well be re-fueled.
Gold (XAU/USD) Chart Showing Open Spaces Ahead
A great week for gold bulls with fundamental drivers forcing the price of the precious metal ever higher. A weaker US dollar and heightened fears over the spread of the Chinese coronavirus have given gold bugs a hefty dollop of bullish momentum. While entering a rising market, backed by strong technical and fundamentals is the textbook way of trading, the fact that one variable – the Chinese flu-virus – has had such a strong impact on the price, adds a layer of caution to the trade. One constant that traders can look forward to in the weeks ahead is increased volatility as fundamentals and technicals battle to take control of longer-term price levels.
The price of gold is now attempting to punch through old horizontal resistance off the January 8 candle at $1,588.6/oz. This print was the highest made in nearly seven years and above here resistance points become harder to identify. The daily chart shows the price of gold propped up by the 20-day moving average, which now acts as support around $1,564/oz. Below here a cluster of recent highs and lows around $1,557/oz. The precious metal is mildly overbought but not to the extent seen in late-December to early-January. Supportive short-term higher lows over the last two weeks add further bullish sentiment.
Gold Daily Price Chart (May 2019 - January 31, 2020)
To find the next levels of resistance we need to look at the monthly chart and, even then there is little in the way of specific price points. A wider look at the chart suggests the formation of a cup-and-handle pattern which would imply that $1,796/oz. level is the approximate technical target. Gold has broken above the 23.6% Fibonacci retracement of the August 1999 – September 2011 long-term rally at $1,527/oz. while all three moving averages paint a bullish picture.
Monthly Gold Price Chart (January 1997 – January 31, 2020)
The recent CoT report showed traders trimming their net-long positions in gold, but they still remain at elevated levels.
What is your view on Gold – 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.