And how long will it last?
It’s been a wild ride for gold the last couple of weeks, as markets have done their best to navigate the poorly communicated policy shifts at various central banks.
From pricing in plenty of rate hikes to paring back expectations, gold has previously broken below the ascending channel and set itself up for a potentially deeper dive, before now soaring higher to test the mid to late summer highs.
Once again though it has run into some difficulty just shy of $1,833 which has been a solid area of resistance in recent months. Whether this is just some short-term profit-taking, based on past experience, or another show of strength for the level, we’ll soon see.
The momentum indicators on the 4-hour chart did start to drop as gold approached $1,830, creating a divergence that gave the impression it may struggle around this level.
If we do see price pull back a bit, it will be interesting to see how it does around $1,810-1,815, where it recently saw some support and prior to that, resistance. It also coincides with the bottom of the rising channel it previously traded within, which may attract some interest.
A break above $1,833 and things start to look a lot more bullish for gold. A lot of attempts have been made on that level and this would represent a break of the longer-term 61.8 fib level on the daily chart, which could be significant.
Of course, in a world in which policymakers are concerned about prolonged but transitory inflation and warning about rate hikes they don’t then vote for, who knows for sure what lies next. Come December, rate hikes may be underway, the Fed may be anticipating a couple of its own next year and gold may be heading south once more.
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.