Gold builds on the bullish breakout to its highest levels since October 2012
Upon the topside breakout from the narrowing wedge last week, gold made strides towards testing the previous year's high and tested waters just above that in late Friday trading.
However, the daily close fell short of breaching that level ($1,747.36) but gold buyers returned from the weekend break with more vigour and we are seeing a more convincing break to the upside now with gold trading higher by over 1% currently.
That puts price at fresh highs since October 2012 as we see gold trade above $1,760:
The surge higher in gold is largely due to the technical break after a period of consolidation as seen in the narrowing wedge over the past few weeks.
The fundamentals of gold have been more favourable - especially when you consider the unprecedented amount of global central bank easing at play - but gold has struggled a little amid profit-taking and liquidation trades from time to time.
However, once those factors start to recede and gold can focus back on the fundamentals, the precious metal stands reason to push higher so this could just be the beginning.
The $1,800 level is the obvious target next and quite frankly, I expected another leg lower in gold before really seeing this move materialise but here we are.
My initial reasoning was that everyone could see this play coming and gold hasn't quite focused on this particular fundamental perspective just yet. Otherwise, the commodity could even see price exceed $2,000 if investors are piling into gold for this reason.
But upon the break of the narrowing wedge above, there was no reason to fight the technical levels. After all, the chart remains the number one compass for every trader - especially to define and limit risk.
For now, the $1,800 level looks to be the target that buyers will aim for. Let's see if they can keep the momentum going in the sessions ahead to get there.