Technical view: Gold is glittering again! Can it break 4-month highs near $1875?

The yellow metal has quietly formed a bullish channel over the last six weeks - where will it go next?

Gold 4

There’s no beating around the bush: Gold’s performance through Q4 of last year and Q1 of this year was immensely disappointing for precious metal bulls. Despite political uncertainty, rising bond yields, a falling US dollar, and hints of inflation amidst unprecedented economic stimulus across the globe, gold steadily fell until eventually forming a double bottom beneath $1700 in March.

If you're interested in investing in physical gold and silver, check out our partner CoinInvest!

Just when even the most hardcore of gold bugs was losing faith, the yellow metal has quietly formed a bullish channel over the last six weeks. Over that same period, the 14-day RSI indicator has formed a bullish channel of its own, signaling growing buying pressure behind the move and the potential for it to extend further in the weeks to come:

Source: StoneX, TradingView

Looking at the key levels to watch, gold is testing the $1875 area, the 50% Fibonacci retracement of the pullback from last year’s record highs; this area also marks the minor highs from late January, providing a confluence of resistance levels and increasing the odds of a potential pullback in the latter half of this week.

That said, the medium-term momentum has clearly shifted back in favor of the bulls, with the 20-day EMA providing support and the 200-day EMA turning higher for the first time in months. A confirmed break of $1875, if seen, could open the door for a continuation toward the next level of previous resistance at $1960 or key psychological resistance at $2000. Only a break below the bottom of the bullish channel and the 200-day EMA in the $1800 area would erase the near-term bullish bias.

How to trade with City Index

Follow these easy steps to start trading with City Index today:

  1. Open a City Index account, or log-in if you’re already a customer.
  2. Search for the market you want to trade in our award-winning platform.
  3. Choose your position and size, and your stop and limit levels.
  4. Place the trade.
8.7.3

Build your confidence risk free

More from Gold

Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.