Gold Technicals – Pushing Deeper Above 1,400 but Key Resistance Looms

Hourly Chart

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Gold prices managed to break away from the 1,405 soft resistance today following a strong bout of safe haven flows during Europe open. There isn't any clear reason why European traders are so risk averse currently, especially since German IFO survey numbers were all slightly better than expected, with Business Climate coming in at 107.5 vs 107.0 consensus estimate, Current Assessment at 112.0 vs 111.0 and Expectations 103.3 vs 103.1. It seems that market is getting jittery over the Syrian political unrest, with USA rumored wanting to step in with military intervention and Russia warning US not to do it.

The question that we need to ask is whether this risk aversion is going to continue or are we simply seeing a one time panic revaluation of the market which will simmer down eventually. As the Syrian rumors came in during late US/ early Asian session, it is interesting to see European traders reacting so strongly to such a news. Perhaps we should wait for US trading session a few hours later to help determine if the world is still panicking over the same issue. But whatever the case may be, Gold bulls will need to break the significant overhead trendline in order to proceed higher further.

Weekly Chart

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The importance of the descending trendline can be seen via the Weekly Chart. Currently we are at the confluence between Channel Bottom and the floor of Consolidation Zone found between late April - early June. If we manage to break into the Channel, we could see acceleration towards Channel Top which happens to be the confluence with the same Consolidation Zone ceiling. Failure to do so may also trigger huge selling momentum as hedge funds that have been supporting the rally from 1,200+ may see this as the end of the road as far as their Gold punt go. Therefore, we are at an important junction for Gold right now - either way we are slated to see huge movements in the next few weeks.

More Links:
GBP/USD – Continues to Settle under Key 1.56 Level
AUD/USD – Trades within a narrow range above Support at 0.90
EUR/USD – Continues to Feel Pressure from Resistance at 1.34

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu