Gold takes off
Suddenly, there are signs of life in the gold market. As of Friday afternoon, the yellow metal is up close to 3% and trading around $1,920 an ounce. That is quite a significant move in just one day, and represents a gain of 6% from the low hit this time last week. It’s possible that gold has put in a bottom around the $1,810/20 area, although there is the danger that this level could be taken out on an extended corrective pull-back. But for now, the bulls are hoping that these recent gains represent a more durable recovery for gold, and that any correction will be relatively shallow.
According to the daily chart above, it looks as if gold needs to push above its current level (around $1,920) to break the downward-sloping trendline linking recent highs. If it can break above and then hold this line on pullbacks, then there’s potential for more upside. But it may take a few attempts, as it’s looking very overbought above $1,900.
If resistance is respected, there’s always the possibility of a deep and protracted sell-off which could break below the first obvious and significant line of support around $1,850. If so, then we’d be looking for a retest of support around $1,810/20.
According to the daily chart above, it looks as if gold needs to push above its current level (around $1,920) to break the downward-sloping trendline linking recent highs. If it can break above and then hold this line on pullbacks, then there’s potential for more upside. But it may take a few attempts, as it’s looking very overbought above $1,900.
If resistance is respected, there’s always the possibility of a deep and protracted sell-off which could break below the first obvious and significant line of support around $1,850. If so, then we’d be looking for a retest of support around $1,810/20.
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