Facing resistance around $1,833
Gold was given a helping hand by Jerome Powell and the Fed on Friday when they signalled that they can be patient on tapering and that it is not linked to interest rates.
The comments brought US yields and the dollar lower and triggered a rally in gold which generally does well in more accommodative environments.
But while gold did rally and significantly break above $1,800, it still remains a little short of the July highs around $1,833 where it repeatedly ran into resistance.
So this remains the key barrier for gold . A break above here could be viewed as a very bullish signal for the metal. But will it have such a significant breakout in it?
While the Fed told investors what they wanted to hear on Friday, tapering is still likely this year, even if not in September. And rate hikes won’t be far behind, whether linked to tapering or not.
Gold may have been given a lift in the near term, but the medium-term doesn’t look so bright for the yellow metal. Will that hinder it around $1,833 this time around as well?
One thing that may help it above here and to generate some real upside is poor US data which could cast real doubt on a taper at all this year, especially if accompanied by a continued surge in delta cases.
A move above $1,833 could see traders eyeing up the early summer run towards $1,900. Perhaps a little ambitious looking right now but a lot has changed in the last few weeks. Who knows what the next few holds, starting with the jobs report on Friday.
