Gold approaching the tough resistance of $2,075-$2,082 once again

Gold is currently trading at around $2,043 an ounce. On the weekly interval, we can see that once again it is approaching the tough resistance of $2,075-$2,082. Since August 2020 the commodity has been rejected on two separate occasions (ovals), both resulting in a fall/pullback afterward. However, we can see that the support for a move higher is more supported on this occasion, with the last higher high reading of $1,931. The trendline also provides support after the candlestick commencing the first week in October closed above it, offering support further along the trendline around $1,905-$1,915. A break below the trendline support would create uncertainty with an increased likelihood of further falls. On the other hand, a break and close above the tough resistance zone could see Gold rise much higher, especially if accompanied by any headwinds in the markets. The target for the bulls then would sit in the region of mid-high $2,100. Looking at the technical indicators, they are now comfortably bullish. The MACD is above the zero line and the RSI reads 61.

 

If we look at the chart from a daily perspective, the most recent higher high ($2,009) followed by the higher low ($1,931) is more visible. The forecast on the daily remains the same as mentioned above, it is more of a mid-long term outlook rather than short term. This analysis is based on the daily timeframe technical indicators. We can see that even though the MACD is continuing its positive momentum, the RSI actually suggests that the market is slightly overbought (reads 73). Hence, it is possible that a retracement could occur before any moves higher. We can see that a similar move happened towards the back end of October when the RSI suggested overbought conditions for 8-9 days. The price of gold then retraced at the start of November before reaching today’s levels. But of course, it’s not guaranteed that a similar scenario will play out again.