Six weeks back, the gold prices had diverted into the lower band of Bollinger bands, signaling weakness. However, last week, the yellow metal prices closed at $1476.13 per ounce, with 1.03% gain. This movement marks as a breakout from the earlier choppy market. So, I see an evident sign of price surges in the coming weeks.
Price Growth Despite Unfavorable Global Cues
It’s quite surprising to see the gold prices to nudge higher despite positive trade updates and positive UK Election outcome.
During the weekend, the United States and China agreed over terms of “phase 1” trade deal, where the US reduced few tariffs and China backed-off retaliatory actions. With this relaxation in the trade dispute, the world economic environment appears cheerful.
Meantime, Boris Johnson’s Conservative Party won the majority in the UK Elections, ensuring Brexit. Now, the UK PM will initiate plans to strengthen its bonds with the Euro counterpart.
Nonetheless, the yellow metal appeared to touch its weekly high, shrugging over these unfavorable global cues.
On the weekly chart, I can see foresee strong price growth. Being above the XAU/USD pair, the parabolic SAR has been declining since the last few sessions. Now, it has almost reached in close proximity with the candles. Hence, an expectation for a trend reversal gets validated.
Anyhow, the gold prices need to generate more momentum over time as the Stochastic Oscillator was indicating merely 32.99 levels. Any momentum above 50 levels must suffice if there happens a bullish reversal in the coming days.
After the last week’s death cross formation, the XAU/USD pair has hardly moved above $1485 per ounce. However, the pair might soon test the overhead 100-day SMA stalled near $1480 per ounce. The Stochastic Oscillator appears overloaded with momentum required for a potential breakout.
Here, the main support system for the bulls remains the underlying most significant 200-day SMA, hovering near $1400 per ounce.
On the 4H chart, the XAU/USD pair appears to have already thrived above a major counter trendline. This counter trendline has been obstructing the pair’s upside since the last month. So, now, there would be fewer distractions on the upper side in the near term. On the upside, the next resistance levels remain near 1479.48 and 1484.45 levels, respectively.
In case, if the pair falls below $1470 per ounce, then the below lying slanting support line would get activated immediately.