Technical Analysis of Gold
The gold market was recently locked in a downtrend channel that pushed the precious metal down towards the 1600 level. After successfully testing major resistance by 1620, gold rose in the past two sessions as several comments from Federal Reserve members suggested that low rates are here to stay. As S&P dives into its longest tumble since November, casting a bearish outlook on the greenback and several central banks are looking to ease monetary policy in the foreseeable future, demand for gold is likely to pick up again. At 1.671 at the time of writing gold seems to have the wind in its sails as the bears have been unable to break the uptrend line on the weekly chart, reinforcing the long term bullish bias in the market. Following the recent break of the downtrend line that had been keeping the market down on the hourly chart and considering the positive line capping RSI since end of February, strong bullish action could be expected. The strength of gold is further supported on the hourly chart with the MACD signal line holding firmly above zero in the past week and the bullish alignment of the 20 EMA over the 50 EMA in place. Immediate target for the bulls is at 1713. Once this resistance level is cleared next target sits at 1779. In the alternative scenario, a break below 1600 could delay the upward pressure and open the door for the 1550 level.
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