Gold Talking Points
The price of gold appears to be stuck in a narrow range following the limited reaction to Federal Reserve testimony, but the technical outlook brings the monthly high ($1746) on the radar as the pullback from the yearly high ($1765) reverses ahead of the May low ($1670).
Technical Forecast for Gold: Bullish
The price of gold has traded to fresh yearly highs during every single month so far in 2020, and it remains to be seen if the bullish behavior will persist as the rebound from the monthly low ($1671) fails to produce a break of the monthly high ($1746), which occurred during the first week of June.
Keep in mind, the opening range for 2020 instilled a bullish outlook for gold as the precious metal cleared the 2019 high ($1557), with a similar scenario materializing in February as bullion tagged a fresh yearly high ($1689)after marking the monthly low ($1548) during the first full week.
The monthly opening range for March was less relevant amid the response by major central banks to COVID-19, but the price for gold still traded to a fresh yearly high ($1704) prior to the break of the January low ($1517).
Moreover, bullion climbed to a fresh yearly high ($1748) in April after testing the former-resistance zone around $1450 (38.2% retracement) to $1452 (100% expansion), with the bullish behavior also taking shape in May as the precious metal traded to a fresh 2020 high ($1765).
In turn, the reversal from the May low ($1670) brings the monthly high ($1746) on the radar, but lack of momentum to break out of the range bound price action may foreshadow a potential shift in market behavior if the price of gold fails to mark a fresh 2020 high in June.
Gold Price Daily Chart
Source: Trading View
The price of gold holds within the May range following the failed attempt to test the 2012 high ($1796), and the precious metal may continue to consolidate as the rebound from the monthly low ($1671) fails to produce a break of the June high ($1745).
Nevertheless, the technical outlook for bullion remains constructive as the pullback from the yearly high ($1765) reverses just ahead of the May low ($1670), with the Relative Strength Index (RSI) highlighting a similar dynamic as the oscillator attempts to break out of the negative slope carried over from the previous month.
Need a break/close above the Fibonacci overlap around $1733 (78.6% retracement) to $1743 (23.6% expansion) along with a move above the June high ($1746) to bring the $1754 (261.8% expansion) region on the radar, with the next area of interest coming in around $1786 (38.2% expansion) followed by the 2012 high ($1796).
However, lack of momentum to clear the monthly high ($1746) may foreshadow a potential shift in market behavior as the price of gold fails to mark a fresh 2020 high in June.
— Written by David Song, Currency Strategist
Follow me on Twitter at @DavidJSong