Gold Price Surges to Highest Level Since January, Can it Continue?

Gold Price Forecast:

Gold Price Surges to Highest Level Since January, Can it Continue?

Gold surged to its highest price since early January on Tuesday as US Treasury yields slipped alongside a declining US Dollar. Gold’s price gains see it extend beyond the upper bound of the descending channel from August and add to its rally that began in early April when gold traded beneath $1,700.

Gold (XAU/USD) Price Chart: Daily Time Frame (July 2020 – May 2021)

XAU/USD has since tagged $1,900 and could look to continue higher should the Fed forgo taper talk and the US Dollar declines further as a result. Sustained directionless movement in US Treasury yields, as the market has witnessed over the last few weeks, may also open the door for a bullish continuation higher for gold. While the fundamental landscape and market sentiment could shift at any time, the technical outlook of XAU/USD is encouraging.

Gold (XAU/USD) Price Chart: 4 – Hour Time Frame (August 2020 – May 2021)

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With that in mind, gold bulls may look to “make hay while the sun shines,” so to speak, as the fundamental landscape allows. Initial resistance might reside around the $1,920 mark, although secondary resistance around $1,960-65 is likely the more formidable zone. Beyond the two levels resistance becomes rather sparse until the metal’s all-time high just shy of $2,080.

Unlike much of the August downtrend, gold now has weeks of gains behind it that may create supportive zones beneath in the event of a reversal lower. Such a reversal would likely materialize at the hands of a fundamental shift.

Early support resides along the upper-bound of the descending channel and around the $1,850 mark. Either way, gold looks to be in the midst of a bullish breakout which could see further topside progress in the days ahead. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.

–Written by Peter Hanks, Strategist for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX