Mid-2018 may not have been the best time for gold but the end of the year was awesome. The beginning of January has basically seen a continuation of the positive sentiment on this precious metal, occasionally strengthened by additional factors.
The first factor is also in my opinion the most interesting one. Gold has started the last 6 years in a row with an upswing. At least first few weeks of the year have been positive. Check out the chart for yourself; quite nice, huh? What’s more, we’re getting some help from the fundamentals. Weak data from China and Germany and the general fear of a global slowdown are the main drivers of the rise on the gold. From a technical standpoint, it’s now all about the ascending triangle pattern. XAUUSD has a horizontal resistance at 1,297 USD/oz (orange) and a dynamic support on the black line. In theory, that promotes a breakout of the orange line and a further rise. Another bullish factor here is the formation marked in yellow. That is a failed head and shoulders pattern. Sellers had a chance to use it and go south, but the rate went up instead.
A breakout of the orange resistance is more likely. The target in that case will be the area around 1,307 USD/oz, which for the past few years has been crucial for this precious metal. It has been repeatedly tested over the past few years as both a support and resistance. The buy signal will be cancelled if we get a breakout of the black line.