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Gold Is On a TEAR!

By:
Aaron Hill
Updated: Sep 13, 2024, 13:22 GMT+00:00

With gold's chart studies demonstrating room to navigate higher, a correction to retest breached range resistance could be on the table!

Golden chart, FX Empire

In this article:

On track to end the week up +3.0%, spot gold (ticker: XAU/USD) has outperformed versus the US dollar (USD), underpinned by lower moves in US Treasury yields and the deterioration of the USD ahead of next week’s rate announcement from the US Federal Reserve.

Breakout Higher

In the latest edition of The Pattern Pulse, the FP Markets Research Team noted the following on the daily timeframe:

‘Since forming an all-time high of US$2,531 in late August, gold has been rangebound versus the USD (ticker: XAU/USD) between the said high and US$2,470. Ultimately, although momentum to the upside has slowed in recent months, the trend still favours buyers.

Coupled with this trend, and daily price action testing the upper boundary of the noted range, a breakout higher could attract strong buying pressure. Conservative traders often filter breakouts using simple techniques like waiting for a retest of the breached area to form before committing’.

Dip-Buying?

As you can see from the latest price movement, the yellow metal has broken out to the upside, venturing into unchartered territory and refreshing all-time highs of US$2,572.

According to the daily timeframe, price action is fast approaching channel resistance, extended from the high of US$2,483. This follows the breakout above range resistance from US$2,531. Given the Relative Strength Index (RSI) registering overbought conditions on the weekly chart and on the verge of recording negative divergence, the question is whether the yellow metal pencils in a correction before reaching daily channel resistance and prompting a retest of the breached range resistance (red arrows). In light of the clear-cut uptrend, this would likely tempt dip-buyers to enter the fight.

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DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

About the Author

Aaron Hillcontributor

Aaron graduated from the Open University and pursued a career in teaching, though soon discovered a passion for trading, personal finance and writing.

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