Gold has posted solid gains in July after bouncing off the four-month low of 1,892 in late June. Although bullion experienced a pullback following a fresh two-month peak of 1,984 on July 20, it stormed back higher in the last couple of four-hour sessions, claiming the 50-period simple moving average (SMA).
The momentum indicators are endorsing a bullish near-term bias. Specifically, the RSI is hovering above its 50-neutral mark, while the MACD turned positive after being below zero for two days. Considering that the price is trading above its upper Bollinger Band, traders should remain cautious.
If bullish pressures persist, the recent two-month high of 1,984 could prove to be the first barricade for the price to overcome. Piercing through that wall, gold could face 2,004, which is the 123.6% Fibonacci extension of the 1,983-1,892 downtrend registered in June. Should that hurdle fail, the 138.2% Fibo of 2,017 may curb further upside attempts.
On the flipside, bearish actions could send the price to initially test the 78.6% Fibo of 1,963, which coincides with the 50-period SMA. Even lower, the attention could shift to the 61.8% Fibo of 1,948 before the 50.0% Fibo of 1,937 appears on the radar. If that floor collapses, the 38.2% Fibo of 1,927 could provide downside protection.
In brief, gold posted a bullish breakout after trading sideways around its 50-period SMA for the past five days. Hence, the technical picture could remain bullish for as long as the price holds above that crucial threshold.
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