The journey higher for gold is far from straightforward as the precious metal continued its volatile and jerky price action intraday. Last week’s price action was another classic example particularly on Friday which saw the metal touch a high of $1362.2 per ounce, only for it to fall back just as dramatically and close at $1344.50 per ounce and the day’s candle ending with a deep upper wick to the body suggesting selling weakness building once more. This was confirmed by the associated volume on the daily chart which was high. However, as the trading session gets underway, the selling appears to have been absorbed with the big operators moving in and taking gold above the $1342 per ounce level, and with a strong potential platform of support in place at $1334 per ounce this should provide some respite to a deeper move lower.
For the longer term, we need to move to the weekly chart, with last week’s long legged doji candle neatly encapsulating the general mood for the price of gold. Indecision and uncertainty abounding and with a big week ahead, much will depend on the FED and the prospect of an imminent rate cut, a prospect which has certainly increased following the dire Empire State numbers, and which could propel gold higher should the US dollar weaken as a result. No doubt something all gold bugs will be welcoming. And from a technical perspective a move to $1370 per ounce and beyond will require an injection of volume to propel the metal through the resistance at $1351 per ounce and the deep volume congestion which extends from there up to the volume point of control itself at $1370 per ounce and denoted with the yellow dashed line. Once through here, volume then falls away as we move on to $1400 per ounce and a return to the high of $1407 per ounce of April 2018.
By Anna Coulling