Gold prices rallied to a near 13-month high as safe-haven demand grew ahead of Friday’s non-farm payroll report. Gold daily holdings for the SPDR Gold Trust, the largest gold ETF in the world climbed 4.7 tonnes to 793.3 tonnes, the highest level since September 2014.
Yesterday, the yellow metal broke out above the major $1,250 resistance level and rose 1.86% to $1,264.90. The bullish trend may remain strong as long as we do not see a robust beat with tomorrow’s labor number. Current expectations are for the US labor market to show an increase of 195K jobs in February.
The rally may continue if we see a daily close above the $1,283 level. Further resistance may come from the $1,300-$1,310 zone.
Price action on the gold daily chart shows that the recent rally may find resistance from a potential bearish ABCD pattern at the $1,282 area. If valid, we could see price consolidate towards the $1,250 zone. The key range remains the $1,250 to $1,300 area. Since breaking out above the 200-day SMA at the beginning of last month, bullish momentum has benefited from a strong pullback with the U.S. dollar. Recent yellow metal weakness may return if we see stronger economic data from the U.S. economy.
The trade: Buy Gold at $1,255 with a stop loss at $1,245 and a take profit at $1,282. The Risk/Reward Ratio is approximately1:3