Thursday's Market Minute: Gold Takes A Breather, But Rally Still In Play

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Gold saw its first major pullback in more than a month yesterday as it snapped a five-day winning streak while the broader red-hot commodities rally paused for a beat. The /GC contract was up more than 15% at its highs on Tuesday since the beginning of the rally at the end of January, taking it within striking distance of the previous highs in August, 2020. But nothing can go up forever, and the yellow metal saw a 3% drop yesterday to take the contract back below 2,000.

There are few signs the rally in gold is slowing from a technical standpoint. One of the only indications of this is that the RSI crossed back below overbought level with yesterday’s slump, but other studies continue to show bullishness. The Average Directional Index continues to climb, suggesting a strong directional trend that is up in this case, while price closed above the upper Bollinger Band twice this week.

Standard Deviation Channels can be helpful to assess price levels for products experiencing big breakouts, and potentially can give clues to where one might expect to find resistance. In this case, /GC’s latest move topped out near four standard deviations from the yearly Linear Regression Line. This shows possible resistance points near the +4 Standard Deviation Channel near 2,064 and the +3 SDC near 2,009, while the +2 Channel provides potential support. The closest common moving average to the downside is the 9-Day Exponential Moving Average near 1,979, which could be a place for bulls to step in once again.

Image sourced from Pixabay

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.