Gold prices are continuing the strong bullish rally, reaching a fresh four-month high of 1,550 today. The short and medium-term biases look positive as the RSI keeps gaining ground in the overbought territory, while the MACD completed a positive crossover with its trigger line above the zero line in the 4-hour chart.
Immediate resistance to further gains would likely come from 1,556, which was last touched on September 4. If there is a successful break above this area, further resistance could be met at the psychological 1,600 and 1,700 levels.
If, however, the strong upside momentum was to lose steam and the pair reverse lower, support would initially come from the 23.6% Fibonacci retracement level of the upleg from 1,450 to 1,548, around 1,527 and the 1,525 mark, which holds near the 20-period simple moving average (SMA). Failure to hold above these barriers would switch the focus back to the downside and attention would increasingly turn to the 1,516 support.
In the medium-term picture, the neutral outlook recently shifted to a strong bullish one and is likely to stay positive as long as prices remain above the SMAs.
