Gold markets continue pushing higher, and valuations have reached as high as $1,703.60 in all of the bullish volatility. Gold investors might have been expecting these moves for quite some time. But, at this stage, it seems fair to say that investors in many other commodities assets have been taken largely by surprise. Oil prices have fallen along with stock markets and this suggests an increased probability that the market is truly experiencing an underlying shift in the paradigm for the commodities space.

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(Chart Analysis: Author)

After overcoming initial resistance levels at $1,360, we can see that gold prices have steadily marched higher. For the most part, downside retracements have been limited and economic trends have influenced gold prices relative to the U.S. dollar. However, the recent coronavirus health concerns out of China have been equally important and gold markets tend to perform best whenever risk aversion is present in the majority’s sentiment. At this stage, there can’t be much doubt that the coronavirus (and its aftermath) has caused significant destruction within the market as a whole and this could continue to be a long-term driver for bullish trends in gold.

From a technical analyst’s perspective, it’s critical to remain objective (even in cases where market concerns generate unexpected price volatility). In these types of market environments, technical analysis can have the ability to generate the best trading ideas because this is an approach that allows us to remove our emotions from the equation and simply focus on what the market is actually telling us.  

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(Chart Analysis: Author)

After the initial breakout level at $1,360 was overcome, it quickly became clear that downside retracements would be much smaller than the resulting rallies. However, what is most interesting here is that we are not yet overbought on the daily charts (shown above). Trend readings in the Commodity Channel Index are highly bullish and this suggests that even a period of consolidation might actually count as a corrective price movement.

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(Chart Analysis: Author) 

In other words, commodities traders that are waiting to see a major dip in the price of gold are likely to miss the next moves entirely. On the 4-Hour charts, support levels have moved up to $1,545 and this is followed by the lows from the end f February near $1,575. A downside break of these levels would suggest a pause in the rally and a period of corrective consolidation. However, this would be a major surprise as things currently stand. More likely, gold markets will continue to rise on macroeconomic concerns in the coronavirus aftermath and this could put us back on track to test the 2011 highs.