Gold closes in on $3K after fresh breakoutGold finally ended weeks of consolidation to break to new record highs today.
It is now looking increasingly likely to reach and potentially surpass the $3,000 level in the coming days. The US dollar continues to remain largely under pressure and with yields declining and stock markets volatile, it remains an overall positive environment for the safe-haven metal.
Traders will continue to monitor the ongoing trade war between the US, and basically the rest of the world, for clues. This week, we have had weaker US inflation data, adding to the recent weakness in data. If we continue to see weakness in US data, then this is something that could well keep gold prices supported.
Countering this, could be any major de-escalation in the trade war, or progress in peace talks between Russia and Ukraine. These factors could reduce the metal’s haven appeal in favour of the more risk-sensitive stock markets.
From a technical point of view, the path of least resistance will be to the upside unless the market structure of higher highs and higher lows break. Key support now comes in at $2929-$2956, an area which was previously resistance. The bullish trend line is the line in the sand for me. A break below it, especially beath the most recent low of $2880 would mark a shift in the trend.
By Fawad Razaqzada, market analyst with FOREX.com
