Gold hits highest level since 2012 – $1800+ next?

• (Re)surging COVID-19 cases in the US, Latin America, and Germany, among others

• Conflicting statements on the status of the US-China trade deal

• Unprecedented fiscal and monetary stimulus measures across the globe

• The VIX (the stock market's "fear index") averaging 40 since the start of March

• 10-year US Treasury bonds yielding just 0.7%

When you lay out all the reasons for (and evidence of) risk in the global financial markets, it's not hard to understand why gold prices are trading at their highest level in over 7 years, as my colleague George Lam noted during today's Asian session. Put simply, even the most diehard goldbug would be hard-pressed to envision a better backdrop for gold prices, and the bulls are now starting to consider whether the yellow metal could make a run at its all-time record high above $1900 sooner rather than later.

From a technical perspective, gold finally broke above two-month resistance at $1750 earlier this week, confirming a small continuation inverted head-and-shoulders pattern in the process. For the uninitiated, this pattern shows growing buying pressure and once confirmed by the break above the "neckline", projects a "measured move" target of the same magnitude as the pattern, in this case above $1800.

Source: TradingView, Gain Capital

As we've learned over the past couple months, market sentiment can turn on a dime, but as long as gold can hold above previous-resistance-turned-support at $1750, the short-term bias points to the potential for further gains. To the topside, bulls may look to target previous resistance near $1800 or the measured move objective near $1815 next.