FX.co ★ HNB | XAU/USD, GOLD

Gold is on the mature bullish trend on the higher time frames. The XAU/USD is approaching the psychological, as well as historical, level of 5,220. The chart continues to indicate increased highs and increased lows, the trademark of a good trend. Pullbacks have been superficial and brief, followed by the price soaring back up and indicating a high level of demand and a resistance on the part of the sellers to push the price down. The market changed behavior structurally when price broke above the previous resistance band of around 4,900-5,000. Such a zone was used to limit gains and result in consolidations. As soon as the price closed decisively over it, it turned into solid support. Its ability to remain above it in subsequent pullbacks is an indicator that it is a value zone to the buyers and built up the momentum toward the recent upswing to record levels. The trend of 5,220 appears like a speeding up process, not an exhaustion. The candles are primarily bullish and the pullbacks leave higher lows way above the previous swing points. This stiffer course is an indication that momentum purchasing continues to rule but the range between the latest convergence carries danger of volatility spurts. The market is extended but it does not imply a reversal as long as there is no obvious collapse in the swing structure. The second opposition is the psychological 5,200-5,220 zone, which is the highest level of the current impulsive channel. It must serve as a temporary ceiling not due to excess supply but as a result of dealers may exploit the situation and reposition around record highs. A breakout would be a daily clear of 5,220. That would be an initial step to the next resistance around 5,300, and 5,400 as a longer-term target depending on the calculated move. The earliest support will be about 5,100-5,080, which corresponds to the last consolidation before the subsequent increase. The larger uptrend should still be healthy when a pullback into this zone is provided, as long as the price remains above it. The second important support is the old break out area around 5000. In the event that gold begins closing above 5,000 daily, the general bullish trend will remain intact. The first structural red flag would be breaking below 5,000, which would give indication of a more fundamental correction. That would entail the following support of the order of 4,850-4,800 wherein past swing highs and consolidations converge. Even a push in that direction would still be a part of an even greater bullish trend unless it is succeeded by a failure to re-take past resistance and by lower highs. The trend structure indicates that corrections are no longer sharp pulls back but more of sideways consolidations. This trend normally shows high demand that is stretching the supply such that the price cannot fall significantly below that. These breaks are continuation patterns and do not indicate a turnaround but rather accumulate the energy to the next climax upwards. Concisely, XAU/USD remains in a robust bullish pattern as it trades at nearly record highs and at levels much higher than the key levels of support. The current resistance level is the 5,200-5220 and the main supports to observe in terms of trend integrity are 5,100 and 5,000. The technical picture continues to suggest further gains, at least, until gold drops beneath these supports and begins to develop lower lows, or it would be the best to wait before the next gain.