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Facing major resistance

Gold has come a long way over the last couple of weeks when it suffered a flash crash at the start of the week.

Since then, not only has it rebounded strongly, it’s crossed back above the support level that was the catalyst for the plunge and headed back towards recent highs.

It’s broken through major resistance levels along the way, the latest being $1,800 which sees it overcome the 50% retracement level from the June highs to August lows.

The bigger test is still to come though. The 61.8% retracement level falls around those July and August highs around $1,833.

The cluster of moving averages may provide further resistance to the yellow metals ascent. But a break above here would be very bullish indeed. The question is what it will take.

The Fed looked destined to announce tapering in September but recent data along with rising Covid cases may derail their plans. That could be enough to see gold come back into favour, something that appeared highly unlikely a few weeks ago after the release of the July jobs report.