Commodities

Technical Analysis – Gold unlocks new 7½-year high; positive outlook on cards

Posted on May 18, 2020 at 6:45 am GMT

Melina Deltas, XM Investment Research Desk

Gold prices surged to a fresh seven-and-a-half-year high of 1,763.58 earlier today, shifting the outlook from neutral to bullish. The strong upside rally is confirmed by the technical indicators which are gaining momentum. The MACD recorded a bullish crossover with its trigger line in the positive area while the RSI is heading higher towards the overbought zone. Also, the short-term simple moving averages (SMAs) are continuing the price action, acting as critical supports.

In case of more positive movements, the market could meet the 1,795 resistance, taken from the peak on October 2018. Steeper increases could send the commodity towards the 161.8% Fibonacci extension level of the down leg from 1,703 to 1,454 at 1,857 and the 1,920 barrier, registered on September 2011.

On the other side, if there is a downside pullback, support could come from the 20-day SMA at 1,712, which overlaps with the blue Kijun-sen line, before flirting with the 40-day SMA at 1,680. Below that, the 1,660 support inside the Ichimoku cloud is coming next. Moving lower, the lower surface of the Ichimoku cloud at 1,598 and the 1,565 obstacle could attract attention.

All in all, gold prices are in a bullish mode after today’s new peak in the short-term and medium-term outlook.

gold

Legal disclaimer: The material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instruments. XM accepts no responsibility for any use that may be made of these comments and for any consequences resulting in it. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. The research and analysis does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it.

It has not been prepared in accordance with legal requirements designed to promote the independence of research, and as such it is considered to be marketing communication. Although we are not specifically constrained from dealing ahead of the publication of our research, we do not seek to take advantage of it before we provide it to our clients. We aim to establish, maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. We operate a policy of independence, which requires our employees to act in our clients’ best interests and to disregard any conflicts of interest in providing our services.

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losing all of your invested capital, so please make sure that you fully understand the risks involved.