Gold skyrocketed yesterday after the US dollar came under massive selling interest. The precious metal broke three resistance (now turned into support) barrier in a row, before eventually stopping at the 1357 hurdle, marked by the peak of the 26th of January. Then, it retreated somewhat. The price is trading above the prior downside resistance line taken from the high of the 25th of January and thus, we believe that the short-term outlook is positive.
We see the case for the bulls to take charge again soon and aim for another test near 1357. If they manage to overcome that obstacle, then we may see extensions towards our next resistance of 1365, defined by the highs of the 25th of January.
That said, our short-term momentum studies suggest that a corrective setback may be on the cards before buyers decide to shoot again. The RSI has topped within its above-70 territory, and just touched its toe below 70, while the MACD, although above both its zero and trigger lines, shows signs of topping as well.
A dip below 1346 could confirm the case for a corrective move and is likely to pave the way towards our next support level of 1337, defined by the peak the yellow metal formed ahead of the US CPIs.
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Article written by Charalambos Pissouros, Senior Market Analyst for JFD Brokers
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