Gold looks poised for new 2019 highs

Gold, which had consolidated for the past few days, looks like it is about to break further higher, after it worked off its ‘overbought’ conditions through time.

Gold was coming off its lows after starting the day on the back foot, following yesterday’s sharp rally when silver caught our attention. Silver took off and it has since extended those gains. Gold, which had consolidated for the past few days, looks like it is about to break further higher, after it worked off its ‘overbought’ conditions through time. The underlying trend is bullish for both metals, due to the falling government bond yields and the recent struggles for the dollar and stocks. So, as things stand, these are good times for buck-denominated and noninterest-bearing precious metals. Indeed, gold’s RSI is no longer at “overbought” levels after price consolidated near the highs. With the metal breaking out of the consolidation, a push to new 2019 highs could be on the cards, potentially as early as later today. The bulls’ next target could be the underside of the rising trend capping the prior highs, which comes in around $1460, with the psychologically-important $1500 hurdle being the subsequent objective. The bears, meanwhile, will be waiting for a clear bearish pattern to emerge before stepping in. A daily close below $1400 could be such an outcome in the short-term. But there are now lots of old resistance levels on the way down which could potentially support prices on any short-term weakness.

Source: eSignal and City Index.

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