- Gold gains traction and climbs to near two-week tops on Monday.
- The $1486-90 confluence barrier might keep a lid on the momentum.
Gold managed to gain some strong positive traction on the first trading day of the week and finally broke out of its one-week old trading range. The momentum lifted the commodity to near two-week tops, around the $1485 region, albeit lacked any strong follow-through.
The yellow metal has now found acceptance above 50-day SMA. This coupled with the fact that technical indicators on hourly/daily charts have again started gaining positive traction support prospects for additional gains despite improving global risk sentiment.
However, any subsequent positive move is likely to confront some resistance near the monthly swing high, around the $1486-87 region. This is closely followed by the $1490 confluence barrier – comprising of 100-day SMA and the top end of a short-term ascending trend-channel.
Given the commodity’s recent retracement from multi-year tops, the mentioned channel seemed to constitute towards the formation of a bearish continuation – flag pattern on the daily chart. The negative outlook is further reinforced by the fact that the metal has been trending lower along a descending trend-channel over the two-month or so.
Hence, it will be prudent to wait for some strong follow-through buying beyond the mentioned hurdle before traders start positioning for any further near-term appreciating move back towards reclaiming the key $1500 psychological mark.
On the flip side, immediate support is now pegged near the $1477 region (50-DMA), below which the commodity is likely to accelerate the slide further towards challenging the lower end of the ascending trend-channel, currently near the $1466 area.
Gold daily chart
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