Gold could be poised to challenge its all-time highs, reports Fawad Razaqzada.
Thanks to record low rates and QE, not to mention increased safe-haven demand, gold has managed to retain most of its recent gains. And now it may have formed a key technical signal that it wants to break new 2020 highs.
Look at this daily chart of gold:
Source: TradingView and TradingCandles.com
On Thursday, gold may have ended its recent consolidation phase as the market decided that it wants to go higher. The metal broke above the bear trend of the consolidation formation, creating in the process a large daily bullish engulfing candle.
The engulfing candle more than made up the losses from the day before, thus ending the short term bearish bias.
It is important that gold now holds above Wednesday’s high of $1,708, which is the first key level of support now. If it doesn’t then the bulls may be in a spot of bother and would be in real trouble should gold go on to break below Thursday’s low of $1,682.
But if gold does hold the breakout then the bulls may target the liquidity above the recent high of $1,747, with the 127.2% Fibonacci extension at $1,772 being the subsequent target.
The key risk is Friday’s U.S. jobs Employment Situation Report. If the nonfarm payroll losses are not as bad as indicated by recent ADP and jobless claims data, then that could help to support the dollar and undermine gold. But I doubt this would be the case.
Fawad Razaqzada, Senior Market Analyst at TradingCandles.com, is an experienced forex market analyst and economist. He posts market analysis on all sectors from both a technical and fundamental. Previously he served as a market analyst with FOREX.com and City Index.
