Gold – Further rallies to come?

Or could we finally see a bearish breakout?

The recent rally in gold appeared to be building momentum but just as it did, it ran into firm resistance around $2,000 and it’s been downhill since then.

The yellow metal may have been supported by higher inflation expectations but yields have continued to rise as traders price in more rate hikes on the back of some very hawkish Fed commentary.

Since falling just short of a major breakout, the price has been falling but could things start to look up again? We may know soon, with gold about to test key support.

The first test falls around $1,925 where the 50 fib coincides with the 55-day SMA. Below here, the 61.8 fib coincides with the 89-day SMA which could pose a further test of support.

Ultimately, this region is a big zone of support, a break of which could be a very bearish signal. Whatever the specific rotation point, a rebound around this area could suggest there are further rallies to come.

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.

Craig Erlam

Craig Erlam

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.
Craig Erlam