Gold (XAU/USD) surged to start the Asian trading day on Thursday. This rebound marks a possible reversal after five straight down projects. Related to this, as the US dollar continues to weaken, we are seeing a dramatic shift in momentum here in the market. Consequently, investors are seeking refuge in precious metals. According to analysts, how things play out for gold will be a huge determining factor in the near-term US dollar’s trajectory.
Gold prices are climbing again, and analysts are predicting gold prices will reach upwards of $4,058 and $4,060. The new target of $4,075 matches with the 38.2% Fibonacci retracement level. This promising new path is remarkable on its own, especially given past years’ downward spirals. Gold has had a hard time staying above key resistance.
SPX underneath market observers have identified a pivotal floor at about 3,917 to 3,916 area. This level would provide space to soften the blow of any additional decrease. They warn that a convincing breach below the $3,900 level could leave gold vulnerable to more rapid declines. Under this latter scenario, prices may be driven down to the $3,800 level, which has more support.
Even with this opportunity for upward mobility, analysts are still cautiously optimistic. They caution that gold could still provide a good place to sell, with a potential peak closer to the psychological level of $4,000. Technical indicators Oscillators on the daily chart are suggesting gold is losing bullish momentum. Market speculation must be approached with caution.
Watch the 100-hour Simple Moving Average (SMA) for gold, which is now located at $4,016 level. Short-term traders heavily use this popular technical indicator as a barometer. They use it to predict future price movements in the market. Inability to build momentum past this threshold would likely result in a continuation of selling pressure.
Near-term resistance is found at $3,850 and then $3,845. Helpful, relevant supports are located near the $3,765-$3,760 area. Gold has to hold here. If not, then we might witness prices crash further down into the low $3,700s.
Gold for now has been losing steam on its inability to hold above the 23.6% Fibonacci retracement. This fight comes after a steep drop off from its historic peak. This misfire is quite telling, suggesting that even though buyers are tentatively re-entering the market, strong headwinds still persist.
As investors gauge the evolving market environment, all eyes will be on gold, as US dollar fundamentals play a key role in determining future price movements. The relationship between these two assets will be key in determining overall market sentiment over the next few days.