Gold broke above the narrowing wedge pattern in trading yesterday
Gold price action has largely been consolidating over the past few weeks, clearly depicted by the narrowing wedge as seen above. But amid the poor start to stocks in early trading yesterday, gold broke out above the wedge to consolidate gains just above $1,730.
So far today, gold is building on that move a little as price is trading 0.4% higher to around $1,736 as buyers look towards resistance closer to $1,739 next before potentially challenging the year's high @ $1,747.36.
Those two resistance levels are all that is left standing between gold and a major breakout to the topside now that we see a more bullish technical pattern being formed.
Fundamentally, there are plenty of reasons to suggest a higher move in gold amid the coronavirus crisis where we are seeing an unprecedented scale of global central bank easing and rise in negative-yielding debt across the globe.
Not to mention increasing chatter of negative rates by major central banks like the RBNZ and BOE - and to some extent the Fed, although they are pushing back for now.
The risk mood remains a key spot to watch in trading today as we look towards the weekend. An equities rally that leads to a dollar selloff may just be what gold needs to kick things into gear but even if stocks suffer, haven flows may keep gold supported as we saw with price action in early US trading yesterday as well.
It's going to be tough to balance things out but keep above the broken trendline resistance of the narrowing wedge and technically, gold may be on the cusp of something big.
