Gold Soars To Critical Level: What's Next?

Gold Soars To Critical Level: What's Next?

(Photo by Jingming Pan on Unsplash)

The price of gold has surged recently amid hesitation across major indexes. On Tuesday, it approached a critical resistance zone at the $1,900 mark.

Currently trading down about 8% from its August all-time high of $2,075 and up 13% from its March low of $1,678, a move above the $1,900 level could give gold a chance to run back toward $2,000 an ounce.

Summer is also a typically strong season for precious metals and if gold can make a close above its overhead resistance, the smart money may start to enter into miners.

Barrick Gold Corp (NYSE: GOLD), Kirkland Lake Gold Ltd (NYSE: KL) and Newmont Corporation (NYSE: NEM) are among some of the largest mining stocks that may benefit from higher gold prices.

The Gold Chart: On Tuesday afternoon, gold prices rose just under 1% and wicked just under $1,900. Gold is trading above both the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending above the 21-day EMA, which are both bullish indicators.

Gold is also trading above the 200-day simple moving average which indicates overall sentiment in the precious metal is bullish.

Gold has traded between support at $1,863 and resistance at $1,900 for the last seven trading days, not closing below its support and also not able to pop over resistance.

Gold’s relative strength index (RSI) is registering up at 76%, which indicates it is in the overbought zone. Traders and investors may want to see gold’s RSI drop back below the more comfortable 70% level to feel more confident in a larger move to the upside. A consolidation period after today’s move would help to cool gold’s RSI.

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Bulls want to see gold close about the important $1,900 level for a move up back toward $1,943. If gold could clear that level and use it as support, it has room to trade back near $1,980.

Bears want to see gold continue to reject its overhead resistance and for it to fall back toward support at $1,863. If gold was unable to hold that level as support it could revisit the $1,831 mark.

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