Gold has continued to trundle higher on Friday but as was the case a week ago, momentum in the move is fading as it closes in on a notable resistance zone.
Since the yellow metal burst through the $1,200 resistance last month, it appears to have lost some of its spark and with it now approaching possible resistance between $1,290 and $1,310, I wonder if it has what it takes to break beyond here.
The rising wedge that has formed over the last month suggests it may be topping out, with confirmation coming from a break below the wedge support. This may take a few weeks to materialise but if it does, it could mark the end of the rally that began at the start of the year.
Of course, should we see a break through the top of the wedge, it would indicate a continuation of the trend, but having failed to again today, this is looking less likely.
On an intra-day basis, we could see some more downside in the coming days, despite having found early support around $1,262.
The correction that has followed has seen Gold run into resistance around $1,270, which provided support in the early hours of this morning. It’s also the neckline of the head and shoulders that it broke below earlier on.
While the conservative price projection – the size of the move from the shoulder to the neckline, projected below the neckline – has already been hit, the more aggressive projection – the size of the move from the head to the neckline, projected below the neckline – could still be hit.
This falls around $1,251.50 and is the upper end of the resistance zone that it broke above earlier this month.