Gold Price Outlook – Has the Bullion Hit Resistance?

GOLD KEY POINTS

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The gold price consolidates after trading to the new yearly highs every month of 2020, and the bullish trend might carry into the august with the Relative Strength Index (RSI) clear the February high at 80 as the indicator registering a fresh extreme reading at 88 in 2020 as the precious metal take out the all-time high in September 2011 trading at $1921.

Technically speaking, the rally in gold prices might persist with the RSI still holding over 70. Also, the trends are based on the SMA (Simple Moving Averages) highlighting the bullish forecast as the 50-Day SMA trading at $1784 and also the 200-Day SMA trading at $1630.

Nevertheless, the gold seems to be finding key resistance ahead of the key psychologically essential $2000 level as it continues to struggle to further extend the array of higher lows and highs from last night. Also, the pullback from the previous high trading at $1981 might result in a short term correction incase the RSI flashes the textbook sell slips and signals under 70.

Until such a time, the conditions of the current market might keep the bullion prices afloat s the high RSI reading is followed by a crowding trend in the USD still showing retail investors net-long USD/CAD, USD/JPY and USD/CHF as the crowd remains net-short EUR/USD, GBP/USD and AUD/USD.

The net long USD exposure seems determined to persist this month, although the DXY plummets for the 6th consecutive weeks. Also, the low-interest rate-setting alongside the swelling Fed’s balance sheet might continue acting as the backdrop for gold prices as the participants of the market seek alternative fiat currencies.

Gold-Price-Forecast

Always remember that the gold price cleared the $1796, 2012 high as the RSI created an upside trend in June. With the latest strength in the gold prices pushing this indicator into the oversold zone for a 3rd consecutive time, although it snapped the uptrend brought forward from last month.

The highest reading in the relative strength index is highly likely to be followed by the higher bullion prices amidst the price reaction that was seen in February and the bullish trend might persist for the duration that the ind9icator will hold steady over 70. Also, the Prices Of Gold Vulnerable As Relative Strength Index Snaps Upside Trend.

Furthermore, the key psychologically vital $2000 level holds steady on the radar with the gold prices clearing the ceiling of the previous high trading at $1921 September 2011. And the break/close over the $1971 Fibonacci (100% expansion) to trade at $1985 (261.8% expansion) might nudge the gold towards $2024 which is a78.6% expansion zone as the RSI holds steady in the oversold zone.

A closer look ahead, the relative strength index might help validate after the price of gold hits resistance when the momentum indicator flashes the textbook sell signals and slips under 70.

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