· Gold Price Analysis: XAU/USD refreshes two-month tops, challenges 61.8% Fibo. level
Gold attracted some dip-buying near the $1941 region and jumped to fresh two-month tops during the early European session. The commodity was last seen hovering around the $1952-53 region, marking the 61.8% Fibonacci level of the $2075-$1764 downfall.
The emergence of some fresh selling around the US dollar was seen as one of the key factors that assisted the dollar-denominated commodity to regain traction. The precious metal has moved back into the positive territory for the third consecutive session.
Meanwhile, any subsequent positive move is likely to confront resistance near the $1960-65 congestion zone. Given that RSI on the daily chart is holding just above the 70.00 mark, the XAU/USD is more likely to take a brief pause near the mentioned barrier.
That said, some follow-through buying will be seen as a fresh trigger for bullish traders and set the stage for an extension of the recent bullish move. The yellow metal might then aim to reclaim the key $2000 psychological mark for the first time since August 2020.
On the flip side, immediate support is pegged near the $1930 level and is closely followed by the 50% Fibo. level near the $1920 area. Any further decline might be seen as a buying opportunity, which, in turn, should help limit the downside for the commodity.
· New Year Begins with an Exponential Rise in Gold’s Bullish Sentiment
Although the factors that moved gold pricing just over $50 on the first trading day in 2021 have been in existence for quite some time. However, real concern regarding the eradication of the coronavirus through vaccinations and the timeline that would take, coupled with the enormous capital that the U.S. Treasury has already allocated for fiscal stimulus has become the primary focus of traders and market participants.
A technical basis market action today provided traders with confirmation that the bullish trend is not only intact but has the energy to sustain prices moving to a higher level. The first significant observation is that gold prices opened just above their 100-day moving average which is currently fixed at $1901.70
Secondly, gold prices broke through and closed above a key resistance area based upon Fibonacci retracement. The data set used for this retracement begins in the middle of March when gold bottomed at $1450 and concludes during the first week of August when gold reached its all-time record high at $2088. The 23.6% Fibonacci retracement is currently fixed at $1937.90, and gold close well above it currently fixed at $1946.70.
The 23.6% Fibonacci retracement is the final retracement level between current pricing and the all-time record high. This means that we have minor resistance levels that are based upon recent price tops that were not sustainable. The first level of minor resistance occurs at $1961 which was the high achieved during the second week of November. The next level of minor resistance occurred mid-August when gold pricing was at approximately $2023 per ounce. With absolute major resistance found at $2088, the all-time record high occurred the first week of August.
Today’s dramatic rise in both gold and silver pricing represents the real potential for the current rally to gain momentum and to quickly move to the next level of potential resistance. The chart included in this article details the four primary levels where gold could find resistance that is based on recent tops in gold pricing.
Reference: FXStreet, FXEmpire
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