Gold broke over the narrowing of the wedge pattern in trading yesterday
The action of gold prices has largely consolidated in recent weeks, clearly illustrated by the narrowing of the corner, as seen above. But in the midst of the poor start to stocks early yesterday, gold broke above the corner to consolidate gains just above $ 1,730.
So far today, gold is leaning a bit on this movement, the price trading by 0.4% to around $ 1,736, buyers approaching the resistance of $ 1,739 before defying the most high of the year at $ 1,747.36.
These two levels of resistance are all that remains between gold and a major upward breakthrough now that we see a more bullish technical pattern forming.
Basically, there are many reasons to suggest an increase in gold in the context of the coronavirus crisis, where we are witnessing an unprecedented scale of easing in global central banks and an increase in negative yield debt at worldwide.
Not to mention the increasing chatter of negative rates by the big central banks like the RBNZ and the BOE – and to some extent the Fed, although they are pushing back for now.
Risk humor remains a key point to watch in trading today as we look to the weekend. A stock rally that leads to a liquidation of the dollar may be what gold needs to speed things up, but even if stocks suffer, flows of paradise may continue to support gold as we have seen yesterday with an action on prices in the first American exchanges.
It’s going to be difficult to balance things out, but to stay above the broken resistance of the narrowing trend line of the corner and technically, gold may be on the verge of something big.