Gold – Capitalizing on safe haven flows

Gold soars through $1,350

Gold hasn’t hesitated to capitalize on the risk averse markets, soaring through $1,350 today to hit a 14-month high.

The yellow metal has run straight into resistance again though around $1,360, which coincides with the peaks we saw throughout 2017 and 2018. Even above here we could see further resistance around $1,370, around the 2016 peak. Above here though, we could see gold gather further momentum.

Gold Daily Chart

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I’m not convinced the risk aversion will hold though so this may rely on the dollar coming under further pressure, which wouldn’t come as a surprise after it fell to its lowest level since March last week. We’ve seen a recovery since then but that already looks to be running out of steam, which could see its resolve tested.

The dollar index below shows the greenback testing prior support from below and struggling to break back above.

US Dollar Index

Source – Thomson Reuters Eikon

As the day has progressed, gold has pulled back from its highs and is now testing prior resistance from above. If we can close the week above here, it could be viewed as a very bullish signal and help get next week off to a strong start.

Gold 4-Hour Chart

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Former Craig

Former Craig

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.