Gold Technicals – Knocking on July Highs

There is no stopping the Gold train now. Prices rallied strongly during early US session yesterday, pushing the bullish envelope further following Monday’s gap. Prices hit a high of 1,344, just 1 USD shy from the 1,345 significant resistance ( see daily chart below) before trading lower once again. However, the previous ceiling keeping bulls at bay on Monday has now been transformed to be the hero, providing support for bulls during Asian session today.

Hourly Chart

The manner in which price found support suggest that bullish pressure remains strong, with bulls guarding the consolidation “breakout” jealously, not allowing bears an inch back. With price bouncing higher from the confluence of Channel Bottom and the ceiling turned support, the likelihood of Gold prices pushing back towards Channel Top is high. Couple this with Stochastic readings pointing higher, forming a trough just around the 50.0 mark (where troughs have been observed in recent past), technical indicators concur with one another that a push towards 1,345 and higher is indeed viable.

Daily Chart

Long term chart is less bullish though. Ideally price would need to clear the 1,345 mark in order to open up 1,420 and 1,480 – previous swing highs back on June and May respectively. Currently price is heading into July’s ceiling once again just as Stochastic readings dabbles into the Overbought region. If 1,345 – 1,350 remains untested/unbroken, it will not be difficult to imagine price heading back towards the descending Channel Top which will provide some support. It is likely that consolidation zone between 1,270 – 1,300 will provide some interim support as well.

Fundamentally, it seems that Gold prices has been detached from fundamental forces in recent days. The correlation to broad risk trends (e.g. US stock prices) or even QE Tapering rumors/announcements has been erratic at best and non-existence at worst. Interestingly, latest reports say that hedge funds have been spotted selling Gold yesterday, just under the 1,345 levels. It is important to note that Monday’s gap has everything to do with market buying and driving up gold prices due to the latest COT numbers, suggesting that institutions traders are buying up more Gold. However, as the COT numbers are highly lagging, last Friday’s figures may not accurately reflect current sentiment of institutional traders. Should hedge funds and other institutional guys sell right now, it will not be surprising to see price dipping back towards 1,200 and potentially back below descending Channel once again.

More Links:
USD/SGD Technicals – Finding Support Around 1.262
AUD/USD – Undeterred By Worsening Business Confidence
GBP/USD – Looking back towards Key 1.54 Level

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.