Gold's unstoppable rally extends to a fresh multi-month high above $1300
|- An ounce of gold gains nearly $80 in the last three weeks.
- Greenback continues to suffer losses against its rivals.
The XAU/USD pair's rally, which started after the pair refreshed its five month-low at $1236 on December 12, hasn't lost any strength on the first trading day of 2018, lifting the pair to its highest level in more than three months at $1315. As of writing, the pair was trading near its recent peak and was up a little more than $12, or about 1%, on the day.
Although there were no clear catalysts behind the precious metal's relentless upsurge, investors seem to be showing interest in commodities on expectations of a robust expansion in the global economy in 2018.
In addition to the strong demand for commodities, the broad-based selling pressure on the USD is fueling the pair's rise as well. After closing the year near the 92 mark, the US Dollar Index pushed lower on Tuesday as investors are repositioning themselves before they see how the U.S. economy is going to react to the tax reform. Even after the data today showed that the business activity in the manufacturing sector expanded at the fastest pace since March 2015, the DXY failed to stage a decisive recovery and was last seen losing 0.4% at 91.62.
In the meantime, increasing geopolitical concerns over North Korea seems to be providing an additional boost to the safe-haven gold. NBC News recently claimed, via their official Twitter account, that a ballistic missile launch by North Korea was possible sometimes this week.
Technical outlook
Both the CCI and the RSI indicators on the daily chart continues to show technically overbought conditions for the pair. However, buyers could continue to dominate the pair's price action as long as it remains above the critical $1300 handle. The pair could encounter the first technical resistance at $1320 (Sep 18 high), $1334 (Sep. 14 high) and $1344 (Sep. 5 high). On the downside, supports are located at $1300 (psychological level), $1294 (Dec. 29 low) and $1286 (Dec. 28 low).
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