GOLD price has been on a steady uptrend since hitting a low of US$1,614 per ounce in October 2022. Over the past two years, the precious metal has consistently climbed and carved out higher lows, before culminating at an all-time high of US$2,790 on Oct 31, 2024. As of now, gold is trading around US$2,715, reflecting a year-to-date increase of about 3.5 per cent and an impressive gain of over 31 per cent since the start of 2024.
From a technical perspective, the outlook for gold remains robust. One key reason for optimism lies in the breakout from a symmetrical triangle pattern last Thursday (Jan 16). This breakout pattern often signifies a continuation, and in this case, suggests that the broader uptrend that began in 2022 is set to persist. The symmetrical triangle breakout indicates a strong technical foundation for further price advances.
Adding weight to the bullish case, gold prices currently trade above the 20, 50, and 100-day exponential moving averages (EMAs). EMAs are dynamic support and resistance levels that give more weight to recent price action, which makes them especially useful for identifying trend strength. Currently, gold is trading above all these key EMAs, which helps confirm the current bullish trend and suggests that buyers are firmly in control of the market.
Furthermore, the 20-day EMA recently crossed above the 50-day EMA, a bullish signal that underscores the market’s upward momentum. This alignment of moving averages highlights the strength of the current trend and the likelihood of further gains.
Momentum indicators also support this optimistic outlook. The Relative Strength Index (RSI), a measure of the speed and changes in price movements, helps traders identify overbought or oversold conditions. With the RSI climbing above the neutral 50 level to 62, it signals a bullish bias in the market, with buyers maintaining control over the price action and market sentiment tilting strongly towards further upside potential.
On Jan 16, gold price tested the resistance level at US$2,724, a zone that has been rejected on two previous occasions in November and December 2024. While the resistance holds for now, the price is expected to consolidate and establish support above the symmetrical triangle. Should gold manage to close above US$2,724, it could potentially pave the way for a retest of the all-time high at US$2,790. Furthermore, the measured target from the symmetrical triangle breakout points to a potential upside of US$2,920, which offers a promising outlook for bullish traders.
In conclusion, gold’s upward momentum remains firmly intact, supported by strong bullish technical signals. Traders should closely monitor the US$2,724 resistance level. A breakout above this key zone could drive gold price towards US$2,790 and beyond, with US$2,920 emerging as the next key target.
The writer is senior strategist at Phillip Nova