Gold is up over 1% on the day and starting to close back in on testing the $2,600 mark once more. The bounce here comes as the precious metal looks to snap a run of six straight days of losses, after having ran into a test of its 100-day moving average (red line) last week:
For some context, it was the first time since February that the precious metal even touched the key level. And even when you consider the ~9% drop from the highs at the end of October, it’s but a mild correction to the unrelenting gold rally so far this year.
Nonetheless, a major technical level is still a major technical level regardless. This was highlighted in my post last week here.
And it looks like gold buyers are surviving that test in not letting the pullback run much deeper than it could on a break of the key level above.
The bounce so far is decent but not exactly all too convincing though. It is still running into some potential resistance in the form of the 23.6 Fib retracement level of the swing lower this month, seen at $2,596.63. Adding to that, offers layered around $2,600 adds to some short-term resistance around the current region.
So, buyers will still have some work to do. But the case of an early sign of a bottom is at least starting to build.
This article was written by Justin Low at www.forexlive.com.
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