Gold Prices – Have We Hit The Resistance?

The strength of Gold prices has remained high over the last 10 days since reaching the resistance at just under $1300. If you look left on a daily chart, you can see this was the area that clearly broke down in June 2018. Gold is fighting against higher prices here, a true battle of bulls versus bears.

One thing of note which Gold traders should observe around this level, is that the US Dollar looks like it could be turning. The US Dollar index is still holding an upward trend, although it has consolidated slightly over the last 30 days. Crucially, it is still above the highs of early last summer, and looks like it could be stalling and looking for a short term change in direction around here.

What does this mean for Gold? In general, because the majority of traders follow Gold prices versus the US Dollar, then strength of the Dollar tends to push Gold down. We can observe the lows in Gold over summer, and into autumn last year as the Dollar index rallied higher.

This could suggest there may be a pull-back in Gold prices over the coming weeks if the Dollar gains more momentum towards the recent highs. It’s inevitable that a strong rally will retrace as traders unwind positions. The key things are; Is a pull-back just a dip, which will rally once again? Or will the next fall signal a short term top?

Many commentators are calling for much higher prices in Gold. Why? Mainly because we seem to be easing off the cycle of rate hikes by the Fed. Comments came in December of the plan for 2 increases during 2019, which may not even happen dependent on economic conditions as this year progresses. If the planned rate hikes are put on hold, Gold could well see much higher prices during 2019.

So all in all, there is probably a good case for any retrace in Gold to be merely a dip. Traders should be watching for where the possible support levels could be if Gold does decide to slide, and watch for the US Dollar to meet some strong resistance.

from http://www.livecharts.co.uk/livewire/2019/01/gold-prices-have-we-hit-the-resistance/