Gold Technical Forecast: Sudden Surge Places $1900 In Sight


GOLD SPIKES HIGHER ON NEWS OF MINOR CONFLICT


Gold has been in the spotlight lately and rightly so. In times of geopolitical uncertainty, it has been known to act as a safe haven asset as investors continue to pile into the precious metal.


Earlier this week, gold traded above the 8-month trendline acting as resistance, riding the bullish momentum all the way to the 1872 (50% Fib level) /1877 zone of resistance before heading back down, to close briefly below the trendline. Instead of a false breakout, the move was, in fact, a sign of bullish intent that simply required an additional catalyst in order to advance higher.


This morning’s news of a possible skirmish in the east of Ukraine seemed to provide the very catalyst required as gold surged to around 1893. Since then, price action has eased slightly and could look to 1877/1872 as a potential springboard for another go at the psychologically important 1900 level


Gold Daily Chart

Despite gold rising and falling, largely due to news flow, risks remain skewed to the upside but heightened volatility helps to underscore the importance of risk management when trading such volatile markets. Up until today, no conflict had actually taken place but tensions remained high due to the deployment of more than one thousand Russian troops to the Ukraine border.


Could today’s reports of ‘firing’ from Russian-backed, separatist-held eastern Ukraine prove to be the spark that further ignites tensions in the region resulting in higher gold prices?


GOLD’S LONG TERM OUTLOOK


The weekly chart helps to show the recent move in context of historical price action. Apart from 10900, 1916 emerges as a secondary level of resistance.


This article was written by Richard Snow from Daily FX