GOLD READY FOR THE NEXT MOVE
The chances of gold breaking its restrictive trading range are growing with a break higher suggested by the daily chart. Support however remains fragile and needs to be respected if the precious metal is to make another attempt at a multi-week high.
The recent risk-on market theme has kept gold in check, aided in part by a small uptick in the US dollar and US Treasury yields. The dollar’s move back off a multi-week low remains in place and may continue but today’s pause and narrow price range suggests that the greenback needs another driver if it is to move higher. The US dollar index is showing a bullish pattern of higher lows with a mixed pattern of higher highs and any further move higher will soon meet resistance off the 200-dma.
US DOLLAR BASKET (DXY) DAILY PRICE CHART (DECEMBER 2019 – JUNE 19, 2020)
This pattern of higher lows and mixed higher highs is also seen on the daily gold chart but the precious metal is also now gaining support from all three moving averages with gold opening above the 20- and 50-dma today. The two moving averages and the uptrend off the June 5 low all meet around the $1,720/oz. level and should provide short-term support, although with the spot price just $8 higher and the ATR at $21, this support may prove to be fragile. If gold breaks lower, Monday’s low at $1,704/oz. will come into play. If the uptrend remains dominant, gold will soon test multi-week highs around $1,746/oz. leaving the May 18 multi-year high at $1,765/oz. the next target. Either way, a break looks likely in the coming days.
GOLD DAILY PRICE CHART (DECEMBER 2019 – JUNE 19, 2020)
Source and Full Credit – ADVFN