Gold Tests the 1307 Level as a Closest Support

Let’s start with the fundamentals.

Rising gold prices are explained by a few factors. First one is the demand from China due to the Chinese New Year. The second one is the Brexit and the third one is the China-US Trade War. What is more, since the middle of December, the USD is a bit weaker, which is also helping to lift the price of the Au higher.

The problem with the fundamentals is that you can explain basically everything with random events. The situation is different with technicals. Those need to be firm and there is no place for a random interpretation. Here, we do have a mid-term uptrend, so chances for a further rise are higher. In my opinion, the most important bullish factor here is the breakout of the 1307 USD/oz resistance (orange).

That level is absolutely crucial for the long-term situation on the chart. As long as we are above, the buy signal is ON. That brings us actually to the potential trading signal. Price is currently in a correction mode and is about to test the 1307 level from the top. Any bullish price action there, like a hammer or engulfing, will be an excellent buying opportunity.

My outlook on this precious metal is positive as long as the price stays above the blue up trendline. The potential target is the long-term highs on the 1357 USD/oz. Chances that we will get there are pretty high.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis