Gold set to stage fresh breakout
Gold and silver have shown positive movement over the week, keeping their long-term bullish trends intact, as characterised by higher highs and higher lows.
Gold hit a new all-time high in May and has since been consolidating, which has eased 'overbought' conditions in the Relative Strength Index (RSI) on weekly and monthly charts.
On shorter time frames, a potential head and shoulders reversal pattern might be spotted, but on the weekly chart, gold appears to be breaking out of a symmetrical continuation pattern.
Gold has not broken key support around the $2300 area, indicating a potential for another bullish breakout rather than breakdown. This week, it has broken the $2340 resistance level, which may now act as support, with the next resistance level at $2365. A move above $2365 could lead to a new all-time high.
However, if gold fails to break out and drops below the $2300 support, the short-term bullish outlook would change. This scenario would challenge the current bullish trend.
By Fawad Razaqzada, market analyst at FOREX.com
Gold hit a new all-time high in May and has since been consolidating, which has eased 'overbought' conditions in the Relative Strength Index (RSI) on weekly and monthly charts.
On shorter time frames, a potential head and shoulders reversal pattern might be spotted, but on the weekly chart, gold appears to be breaking out of a symmetrical continuation pattern.
Gold has not broken key support around the $2300 area, indicating a potential for another bullish breakout rather than breakdown. This week, it has broken the $2340 resistance level, which may now act as support, with the next resistance level at $2365. A move above $2365 could lead to a new all-time high.
However, if gold fails to break out and drops below the $2300 support, the short-term bullish outlook would change. This scenario would challenge the current bullish trend.
By Fawad Razaqzada, market analyst at FOREX.com
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