Can gold stick with the breakout from yesterday?

Technical Analysis

Author: Justin Low | gold

Gold broke above resistance @ $1,755 to its highest levels since 26 February in US trading yesterday

Gold D1 16-04
There are two things to focus on for gold at the moment after seeing yesterday's price action lead to a breakout to the upside.

One, the chart is advocating stronger momentum for buyers now upon the break above $1,755 with further resistance seen closer to the 38.2 retracement level near $1,785 and then $1,800 level with the 100-day moving average (red line) nearby.

The nudge yesterday to establish such a break was helped by a drag in Treasury yields; while encouraging for gold, may not necessarily be a sustained tailwind.

The second focus point for gold remains one that has been a key factor since the start of the year, that being investor appetite.

ETF holdings for gold were shed further again this week, falling to its lowest level since 20 May last year in the latest session. That continues to reflect a lack of interest and buying appetite for gold, which is likely to drag price lower down the line.

Gold's biggest ETF, SPDR Gold Shares, saw its holdings decline to 32.886 million in the latest session - the lowest since 16 April last year - and there seems to be a slight divergence to gold's latest price action at the moment.

As such, eventually something's gotta give, and if investor appetite still isn't going to return in a significant manner, gold's latest technical upside may be rather limited.

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