April Gold Rally Stalls Ahead of Fib Resistance at $1951.00

Gold futures are trading higher early Monday after jumping more than 1% on the opening as safe-haven demand was buoyed by fresh Western sanctions on Russia and after President Vladimir Putin put his country’s nuclear deterrent on high alert.

The precious metal is up about 6% so far this month in what would be its best monthly gain since March 2021. Gold is often used as a hedge against inflation and as a means of preserving wealth during times of financial and political uncertainty.

At 05:03 GMT, April Comex gold is trading $1913.30, up $25.70 or +1.36%. This is down from an earlier high of $1935.20. On Friday, the SPDR Gold Shares ETF (GLD) settled at $176.52, down $0.62 or -0.35%.

Harsh Western sanctions on Russia over the weekend triggered a risk-aversion sell-off in the global financial markets, resulting in strong safe-haven demand for gold. After the initial thrust, however, prices retreated from the intraday high as speculative buying dried up. This could mean that bullish traders are waiting to see how Russia reacts to the sanctions and whether more will be forthcoming.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1976.50 will signal a resumption of the uptrend. A move through $1821.10 will change the main trend to down.

The minor trend is also up. A trade through $1845.40 will change the minor trend to down. This will also shift momentum to the downside.

The market is currently trapped inside a series of retracement levels that is restricting its movement.

On the upside is minor resistance at $1927.60 and major long-term resistance at $1951.00.

On the downside is major long-term support at $1899.80, followed by a short-term retracement zone at $1878.60 to $1855.40.

Daily Swing Chart Technical Forecast

The direction of the April Comex gold futures contract on Monday is likely to be determined by trader reaction to the minor pivot at $1927.60.

Bullish Scenario

A sustained move over $1927.60 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the Fibonacci level at $1951.00.

Overtaking $1951.00 will indicate the buying is getting stronger. This could extend the rally into last week’s high at $1976.50. This is a potential trigger point for an acceleration to the upside with the August 6, 2020 main top at $2117.00 the next major target.

Bearish Scenario

A sustained move under $1927.60 will signal the presence of sellers. This could lead to a labored break with buyers possibly coming in at $1899.80, $1878.60 and $1855.40. The latter is the last potential support before the minor bottom at $1845.40 and the main bottom at $1821.10.