Thursday's Market Minute: Gold's Advance Slows After Hitting Yearly Highs

Gold futures are taking a breather after a sharp rise of about 8.6% in only 12 trading days that took the yellow metal into new yearly highs of 2,014.90. The upside move has been strong in light of the banking system’s woes, and it got a fresh surge upward yesterday after the Federal Reserve signaled a potential end to its monetary tightening cycle. However, the price advance has stalled near a key technical point: the yearly +2 Standard Deviation Channel near about 1,985, which suggests price is at a relatively extreme level compared to its own price history. However, this certainly does not mean that this upswing is done, as the trend shows little sign of changing yet. 

In terms of other indicators, momentum for the /GC contract remains tilted toward the upside with both the Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI) giving bullish readings, although they have relaxed a bit. The RSI has fallen out of the overbought area, and bulls would want to see another cross above that threshold as well as a break into new highs. 

Examining potential support, the major moving averages are not much help here given how fast the upside move has been. The 9-day Exponential Moving Average comes in around 1,948, so this could be a level to watch and the 21-day EMA is below that near 1,910. For potential resistance, watch for a move above the fresh yearly highs, and then consider for the coming weeks that the yearly +3 Standard Deviation Channel comes in around 2,075.

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