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  • Gold has broken the wave high of USD 1747.82 to trade at a level not seen since 2012.
  • The price broke a key chart pattern on Thursday and now Fib extension targets are in play.

Fundamental backdrop

What a trend we are in in the gold market. It seems fears have been stoked by the potential of the trade war between the US and China escalating again. Just today it has been noted that the US are moving to cut Huawei off from its global list of chip suppliers. This is a statement of intent against Chinese manufacturers as their sales in the US are important. Adding to this White House trade advisor Navarro stated the word is out now and firms must manufacture in the US in order to sell in the US. The Trump protectionist trade is back with a vengeance. 

Softing the US stance, we received mixed signals when Larry Kudlow (Director of the Economic Council in the US) said the trade deal with China is absolutely not falling apart. He went on to have some damning words about the economy saying it's still in "free fall" and The US cannot spend its way out of the pandemic downturn. I bet they are not ready to turn of the printers just yet though.

Technical picture

Looking at the technicals now there is a massive confluence level on the daily chart below. The 161.8% extension from the last wave matches the 138.2% extension from the bigger previous wave down. In addition to this, the level is also the wave high from the weekly chart (shown lower in the article). Levels this strong in confluence do not come around very often so it will be interesting to see what kind of reaction we get at that price. One thing is for sure, if it breaks it will be significant and the all-time highs are next.

Gold Fib targets

The weekly chart shows how important the aforementioned resistance zone is. There were three very strong bounces at the level and it might come into play soon. The Relative Strength Index indicator (RSI) on the chart shows there is still some room to the upside. Also of note, there is now a possible three-wave divergence forming, but if the price does break high it would take it out and the indicator signal line could move over the 70 mark.

Gold weekly targets

Additional levels

XAU/USD

Overview
Today last price 1748.43
Today Daily Change 16.97
Today Daily Change % 0.98
Today daily open 1731.46
 
Trends
Daily SMA20 1706.03
Daily SMA50 1652.59
Daily SMA100 1613.11
Daily SMA200 1552.78
 
Levels
Previous Daily High 1736.38
Previous Daily Low 1711.12
Previous Weekly High 1723.7
Previous Weekly Low 1682.3
Previous Monthly High 1747.82
Previous Monthly Low 1568.46
Daily Fibonacci 38.2% 1726.73
Daily Fibonacci 61.8% 1720.77
Daily Pivot Point S1 1716.26
Daily Pivot Point S2 1701.06
Daily Pivot Point S3 1691
Daily Pivot Point R1 1741.52
Daily Pivot Point R2 1751.58
Daily Pivot Point R3 1766.78

 

 

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