- Gold has pulled back from six-year highs reached earlier this week.
- Daily chart indicators reporting overbought conditions.
- The monthly chart shows a channel breakout and scope for a rally to $1,522.
Gold is currently trading at $1,408 per Oz, representing a 2.1 percent drop from the six-year high of $1,439 reached earlier this week.
With the 14-day relative strength index (RSI) still holding well above 70.00, the yellow metal may drop below $1,400 in the next 24-36 hours. Also, reports of temporary US-China trade truce could weigh over the safe haven metal.
That said, a slide all the way back to $1,360 looks unlikely, as the markets are expecting the US Federal Reserve to cut rates three times this year.
Further, the momentum studies continue to favor the bulls. For instance, the 5- and 10-day moving averages are trending north and the latter, currently located at $1,383, could offer support.
Put simply, a fall all the way back to $1,360 by Friday’s NY close looks unlikely. The metal, therefore, looks set to confirm a bullish breakout on the monthly chart with a close above $1,360.
Monthly chart
-636972019827466256.png)
- The channel breakout further confirms the long-term bearish-to-bullish trend change first signaled by the violation of the descending trendline in July 2017.
- The relative strength index is also reporting bullish condition with an above-50 print.
All-in-all, the stage looks set for a further rally toward $1,522 (December 2011 low). The bullish case would weaken in case the price finds acceptance below $1,360.
Trend: Bullish
Pivot points
Share
