Gold is continuing to edge higher today, supported to an extent by the weaker dollar, not that it held the yellow metal back much yesterday.
It found strong support around $1,320 earlier this week and has since burst higher with the previous peak around $1,350 in its view. A break of this could propel gold higher, although it will have to be matched with momentum because as we saw last week, the absence of this saw it reverse course very quickly.
The shallow correction earlier this week will be encouraging for gold bulls, having only retraced 38.2% on the previous pullback, although this optimism may fade fast if it runs out of steam prior to the peak. Risk appetite in the markets is likely to work against gold but the dollar looking vulnerable is clearly supportive.
Should gold fail to break and pull back further, I don’t think it changes the bullish appearance just yet. The area between the 50 and 61.8 fib levels – roughly between $1,300 and $1,320 – could be a very interesting support area for the yellow metal. A break of this and the picture may start to look very different.
Gold Daily Chart