Developments earlier in the week regarding President Trump's 90 day tariff reprieve and the escalation of the trade war between the US and China have seen Gold recover from its slump, which saw it trade from a low of 2956 on Monday, to very quickly post a new all time high this morning at 3220. An impressive rally of 8.5%.
It seems these two events have shifted the narrative driving Gold from a sell everything rush for liquidity (General rule: bad for Gold prices), to a demand for safe haven assets (General rule: good for Gold prices) as a hedge against uncertainty surrounding whether trade deals with the 56 countries that received a reprieve can be significantly advanced in 90 days, and what damage the tit for tat increase in tariffs between the US and China could do to the global economy.
With this in mind the question is, can Gold continue to move higher towards 3300 as this uncertainty carries over into the weekend, or is there some significant resistance to overcome which could stop the rally in its tracks?
Technical Outlook: Fibonacci Could Hold The Key
Considering he was alive back in the 12th century, Leonardo Fibonacci continues to have an important influence over the price of financial assets and most recently, over the price action in Gold.
Be it retracements or extensions that are calculated using ratios within the Fibonacci sequence, each have highlighted interesting levels for Gold traders of late.
As the chart above shows, the acceleration higher in the Gold price to 3168, on April 3rd, tested but at that time, was unable to close above resistance offered by the 138.2% Fibonacci extension of the October 31st to November 14th 2024 sell-off, which stood at 3146.
This was able to hold the advance and even prompt a sell-off from these upside price extremes. This decline, while only seen over a 3 session period, led to a 6.66% downside move.
Interestingly, this weakness was held and reversed back to the upside by the 61.8% Fibonacci retracement of the February 17th and April 3rd advance in price, which provided support at 2963.
What are the Risks for Gold Now?
Potential Resistance:
Having seen a strong recovery from the 2963 retracement support this week, Thursday’s close managed to break above the 3146 Fibonacci extension resistance, and this morning, a new all-time price high has been posted at 3220.
Such moves could possibly open scope to higher levels, although much will depend on future market sentiment and price trends.
Following latest closing breaks higher and this morning’s new all-time high, next resistance might now be marked by the 161.8% Fibonacci extension, which stands at 3208.
Closing breaks above 3208 in Gold may now be required to suggest a more extended phase of price strength is possible.
Potential Support:
While latest moves to new all-time highs are a potentially constructive development, knowing what support levels could be worth monitoring to the downside, on any price failure can also be useful.
The first support may now be 3119, which is equal to the 38.2% Fibonacci retracement of this week’s strength, and it might be closing breaks below this level that may see downside pressure build.
Having seen prices rally so well this week, breaks below the 3119 retracement if seen, could then prompt traders to look for 3088 tests, which is the 50% retracement, even 3057, where the 61.8% level stands.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
It seems these two events have shifted the narrative driving Gold from a sell everything rush for liquidity (General rule: bad for Gold prices), to a demand for safe haven assets (General rule: good for Gold prices) as a hedge against uncertainty surrounding whether trade deals with the 56 countries that received a reprieve can be significantly advanced in 90 days, and what damage the tit for tat increase in tariffs between the US and China could do to the global economy.
With this in mind the question is, can Gold continue to move higher towards 3300 as this uncertainty carries over into the weekend, or is there some significant resistance to overcome which could stop the rally in its tracks?
Technical Outlook: Fibonacci Could Hold The Key
Considering he was alive back in the 12th century, Leonardo Fibonacci continues to have an important influence over the price of financial assets and most recently, over the price action in Gold.
Be it retracements or extensions that are calculated using ratios within the Fibonacci sequence, each have highlighted interesting levels for Gold traders of late.
As the chart above shows, the acceleration higher in the Gold price to 3168, on April 3rd, tested but at that time, was unable to close above resistance offered by the 138.2% Fibonacci extension of the October 31st to November 14th 2024 sell-off, which stood at 3146.
This was able to hold the advance and even prompt a sell-off from these upside price extremes. This decline, while only seen over a 3 session period, led to a 6.66% downside move.
Interestingly, this weakness was held and reversed back to the upside by the 61.8% Fibonacci retracement of the February 17th and April 3rd advance in price, which provided support at 2963.
What are the Risks for Gold Now?
Potential Resistance:
Having seen a strong recovery from the 2963 retracement support this week, Thursday’s close managed to break above the 3146 Fibonacci extension resistance, and this morning, a new all-time price high has been posted at 3220.
Such moves could possibly open scope to higher levels, although much will depend on future market sentiment and price trends.
Following latest closing breaks higher and this morning’s new all-time high, next resistance might now be marked by the 161.8% Fibonacci extension, which stands at 3208.
Closing breaks above 3208 in Gold may now be required to suggest a more extended phase of price strength is possible.
Potential Support:
While latest moves to new all-time highs are a potentially constructive development, knowing what support levels could be worth monitoring to the downside, on any price failure can also be useful.
The first support may now be 3119, which is equal to the 38.2% Fibonacci retracement of this week’s strength, and it might be closing breaks below this level that may see downside pressure build.
Having seen prices rally so well this week, breaks below the 3119 retracement if seen, could then prompt traders to look for 3088 tests, which is the 50% retracement, even 3057, where the 61.8% level stands.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.