Gold at fresh 7-year high; strongly bullish on virus fears.
Gold surged to a fresh seven-year high earlier today, hitting the 1,679.65 level and continuing the sharp upside extension, posting a gap up. The market recorded four consecutive green days and opened the door for a long-term clear positive direction, following the penetration of the previous top of 1,612 on virus fears.
From a technical viewpoint, the RSI indicator is holding in the overbought territory with strong momentum, and the MACD oscillator is heading north above the trigger and zero lines. However, the stochastic oscillator is suggesting a possible pullback as it created a bearish crossover with its %K and %D lines above the 80 level.
Traders, however, would be more eager to engage in buying activities if the price manages to surpass intraday’s peak of 1,679.65. If this is successfully breached, then the rally may next rest somewhere near the 1,700 level, while a closure above it may be needed to push the price towards the 261.8% Fibonacci extension level of the down leg from 1,557 to 1,445 at 1,733.
On the flip side, if the selling pressure takes control and the market deteriorates lower, it could reach the 23.6% Fibonacci level of the upward move from 1,400 to 1,679.65 at 1,612, which overlaps with the previous top and the blue Kijun-sen line, which is still rising. Such a move could next bring 1,593 and the 38.2% Fibo of 1,573 under the spotlight, which if violated could trigger sharper losses towards the 1,547 support near the 50-day simple moving average (SMA).
Summarising, the yellow metal is expected to show improvement if the price overcomes the seven-year high and the 1,700 psychological level.
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