April Gold Rallies Despite Thin Holiday Trade

April Gold prices continued to rise on Monday in limited price action because of the U.S. Presidents’ Day holiday. Demand for physical gold remains strong. Another reason suggested by investors for the rally is hedge protection against a possible top and subsequent meaningful break in the global equity markets. Whatever the reason for the rally, momentum is on the side of the bullish traders.

Now that the market has reached the retracement zone formed by the August top at $1430.20 and the December bottom at $1182.30, new support is the 50% price of this zone at $1306.25. Possible resistance is the Fibonacci level at $1335.50.

April crude oil futures finished higher in today’s shortened session. Speculators continue to straddle the psychological $100.00 level, but momentum could be slowing. The weaker dollar may be helping to underpin the market as well as steady demand for heating oil because of the lingering cold weather.

Supply continues to remain high, but investors seem to have become accustomed to this news. A steady flow of weaker-than-expected U.S. economic reports should’ve pressured the market, but the weaker dollar probably offset the selling.

The fundamentals don’t support the upside price action at this time, but until the bids stop coming in, the crude oil will remain supported.

The GBP/USD surged to its highest level in four years after an industry report showed house prices increased this month. House prices climbed 3.3 percent after rising 1 percent in January according to Rightmove.

The Sterling couldn’t hold gains, however, as profit-taking ensued after the rally, leading to the formation of a closing price reversal top. Thin trading conditions may have contributed to today’s volatile reversal. Although this chart pattern is not a trend changing event, it could lead to the start of an aggressive 2 to 3 day sell-off equal to at least 50% of the rally from 1.6251.

The EUR/USD also closed lower after posting an earlier gain. Thin trading conditions and profit-taking inside the retracement zone bounded by 1.3684 to 1.3734 are the major reasons for the weakness. Traders may also be squaring positions ahead of this week’s January Fed minutes on Wednesday and Thursday’s U.S. Consumer Price Index report.