- Gold quickly reversed an intraday dip to the $1722-20 resistance-turned-support area.
- The set-up favours bulls, through warrants some caution before placing aggressive bets.
Gold attracted some buying interest near the $1722-20 pivotal zone and jumped to over one-week tops during the early North American session.
The emergence of dip-buying near an important resistance breakpoint supports prospects for a further near-term appreciating move. The constructive outlook is further reinforced by the fact that technical indicators on the daily chart have been gaining positive traction.
Meanwhile, oscillators on the 4-hourly charts have moved on the verge of breaking into the overbought territory. This, in turn, might hold investors from placing aggressive bullish bets amid a strong pickup in the USD demand, which tends to undermine demand for the dollar-denominated commodity.
Hence, it will be prudent to wait for a sustained move beyond the $1740 horizontal level before positioning for any further near-term appreciating move. The commodity might then accelerate the move to test the $1748-50 intermediate resistance en-route multi-year tops, around the $1765 region.
On the flip side, the $1722-20 zone might continue to protect the immediate downside, which is followed by support near the $1715-14 level. Failure to defend the mentioned support levels might turn the commodity vulnerable to slide back towards the $1700 mark. Some follow-through selling will negate prospects for any further near-term appreciating move and prompt some aggressive technical selling.
Gold 4-hourly chart
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Technical levels to watch
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