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The gold price is quoted half a percent higher at $1788 at the start of July, concerning the outlook analyst and technical forecaster Richard Perry of Hantec Markets says this breakout looks to be made on more solid ground.
Gold broke the shackles of a two month consolidation range last week as it moved higher through the old key May peak of $1764.
After a few days consolidating this breakout, the gold bulls are again pushing ahead.
Yesterday’s close beyond resistance at $1779 continues the move as the uptrend of the past three weeks guides the market to new multi-year highs.
This breakout looks to be made on more solid ground, with decisive strength of momentum. Stochastics are holding consistently above 80, whilst RSI is into the high 60s and MACD lines are tracking decisively higher.
We see the way towards at least a test of the old 2012 high at $1795, whilst the bulls will be encouraged that beyond that resistance there is little to prevent a run towards the all-time high of $1920.
The hourly chart shows the bulls already looking to build support at the $1779 breakout this morning.
We would still look to use near term weakness as a chance to buy, with a band of initial support $1765/$1779. The support of the near four week uptrend comes in at $1761 today. We remain bullish whilst $1744 remains intact.
Market Uncertainty Lingers
Major forex and equity indices remain stuck on a see-saw of risk-on/risk-off as a lack of conviction has taken over in recent sessions.
Depending upon how the wind blows, there is consideration of the bearish factors of second waves COVID-19 infections versus the more bullish positioning for continued stimulus from central banks and governments.
However, the feeling is that the risk recovery of Q2 which drove record gains on Wall Street.
However, in the past couple of weeks, uncertainty has crept into markets, The US dollar has gone almost nowhere over the past week and this is reflected across the outlook of consolidation across major forex pairs.
One market is though making ground, with the breakout on gold to multi-year highs. Can this be sustained? In the past 24 hours we have seen Treasury yields starting to pick up once more and a mild yield curve steepening.
This tends to come with more positive risk environment, which is good for equities but less so for gold.
The PMI data (manufacturing and services) and crucial US jobs data (ADP today, Nonfarms tomorrow) in the coming days could be key to whether this improvement in yields continues.
Initial signals from the Chinese PMIs are positive and it will be interesting to see if this continues with the European data and ISM later today.