XAU/USD rallied yesterday, breaking above the crossroads of the 1290 barrier and the downside resistance line drawn from the peak of February 20th. In our view, combined with the fact that the precious metal continues to trade above the medium-term uptrend line taken from the low of August 16th, the move has turned the outlook back to the upside.
Even if the price pulls back due to some profit-taking, as long as it remains above both of the aforementioned lines, we would still see a decent chance for the bulls to take charge again soon and perhaps aim for the 1310 resistance zone, defined by the high of April 10th. If they appear unwilling to leave the driver’s seat, and push above that area, then we may see them putting the 1325 hurdle on their radar. That level prevented the metal from trading higher on March 25th.
Taking a look at our daily oscillators, we see that the RSI crossed above 50 and moved higher, while the MACD, already above its trigger line, has just poked its nose above zero. Both indicators detect positive momentum and support the notion for some further near-term advances. That said, the RSI has just ticked down, adding to our view for a minor setback before the next positive leg, perhaps for gold to test the 1290 level as a support this time.
In order to start examining whether the picture has turned negative, we would like to see a clear and decisive close below 1267. Such a move would confirm a forthcoming lower low on the daily chart and would also place the metal below the medium-term uptrend line. Initially, the bears may be encouraged to drive the battle towards the 1251 obstacle, marked by the inside swing high of December 10th, the break of which may allow the slide to continue towards the 1233 or 1230 zones.
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