Gold Market Analysis
- Last week, gold prices illustrated two distinct trends. Initially, bullish momentum pushed prices beyond the preceding range until encountering resistance at the 2717-2721 level.
- Earlier in the week, I identified this resistance zone, which ultimately curtailed the advance of gold bulls, leading to a notable reversal in the latter part of the week.
Gold prices began the week on a positive note, continuing a rally that began from range support established the prior week. This range represented a period of stability following a significant sell-off triggered by the U.S. Presidential Election in November.
This sell-off, driven by election uncertainties, was followed by the largest weekly recovery since March 2023, around the time the U.S. faced a regional banking crisis. However, the retracement from that recovery established a range that extended through the November close into the December open.
The recent rally managed to create a fresh monthly high, representing the highest price level since the day after the election. Yet, similar to trends observed weeks earlier, resistance at the 2717-2721 range halted advances and initiated a pullback as the weekly close approached.
Gold Four-Hour Price Chart
Short-Term Support for Gold
Currently, there have been multiple attempts by bulls to generate a support bounce, all of which failed post the resistance test on Wednesday.
An initial bounce from 2700 resulted in a lower-high, followed by another bounce from 2675 that similarly produced a lower-high. As the week comes to a close, trading has also penetrated the 2660-2666 zone.
The next crucial support area is significant as it represents prior resistance from early December, spanning the range of 2643-2650.
Gold Four-Hour Chart
Long-Term Outlook for Gold
This has been a remarkable year for gold traders, with the metal climbing approximately 40% from its February lows and currently showing a yearly gain of 28.79%. If this trend continues, it would mark the largest annual gain since 2010, recalling a period where gold prices continued to ascend into the following year prior to a subsequent high and reversal.
The resilience against profit-taking is a fundamentally bullish signal, and I maintain this perspective unless sellers breach key support levels at 2600 and subsequently 2538, which held previous November lows. However, considering the intra-week reversal and the upper wick on the weekly candle, there remains no indication that the current consolidation phase has concluded, urging caution against chasing upward movements.
Key support areas to watch include range support from 2617-2621, which has acted as a low multiple times before last week's rally. Below this zone, focus shifts to the pivotal 2600 level and the 2538-2540 range on the chart.
Gold Weekly Chart
--- Compiled by a Financial Analyst
