Gold inches higher but buyers need to break above $1,300 to extend upside move

Technical Analysis

Gold closes back in on last week’s high

ForexLive

Gold continues to stay underpinned as dollar sentiment remains rather fragile with the Fed speakers continuing to take a more dovish stance yesterday. But despite tepid risk sentiment today and the dollar somewhat mixed, gold is unable to fully capitalise on that in a run higher as the $1,300 handle continues to elude buyers.

The high posted this year was at $1,298.60 posted last week on 4 January. Today’s high reached $1,297.46 and though price has backed off a bit, gold is still up by 0.2% on the day.

Looking at near-term levels, price bias remains more bullish still as it trades above the key hourly moving averages. Sellers tried to wrestle control twice this week but in both times buyers managed to defend a move towards the $1,280 handle before now moving back up towards $1,300.

The $1,300 handle was highlighted last week and the warning then was to be wary of buying at the top and that’s what we’re seeing right now. The dollar is very much in a tricky spot right now with AUD/USD testing the 100-day MA, USD/CAD also testing the 100-day MA overnight, NZD/USD testing the 200-day MA, and EUR/USD looking to hold a break of the 1.15 handle.

What that says is traders are looking for that little nudge to go ahead with those breaks and extend the dollar weakness to the next range. And that’s basically what we’re seeing in gold as well. A break above $1,300 will open up a move towards the resistance swing region between $1,307 and $1,309 and then the 76.4 retracement level @ $1,316.88.

Beyond that, gold sure does looks poised for a move back towards $1,350 from a technical play (seasonal factor also supporting it) but once again, it first has to navigate through those resistance levels starting with the $1,300 handle.

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