(Kitco News) - Spot gold traded sideways in a narrow range between $2,031 and $2,035 per ounce during the Asian and early European sessions, but caught a bid at the North American open, rising over $11 in 20 minutes to a daily high of $2044.65 before pulling back to short-term support near $2,038.20.
In the absence of major economic data, traders are focusing on technical levels and the U.S. dollar index for catalysts.
“Gold has drifted a little bit lower during the trading session on Wednesday,” wrote FXEmpire analyst Christopher Lewis. “It looks like a market that just doesn’t really have anywhere to be in the short term, but in the longer term I still think it becomes very positive. With this, you are probably going to have to be very patient.”
Lewis said he believes the $2060 resistance level “is going to be crucially important,” and will determine near-term price action. “If we can break above there, then the $2075 level would be your next target,” he said. “Anything above $2075 becomes buy and hold as gold suddenly would find itself breaking out quite nicely.”
In terms of support, Lewis pointed to the 50 day EMA. “And underneath there, we have the crucial $2,000 level,” he said. “The $2,000 level swings down to the $1,980 level, which I think is the absolute floor in the market and one that traders will be paying close attention to. With that, anything below that area, I think really starts to attract a lot of attention and we have to consider that perhaps the overall trend is busted, but right now that doesn’t look likely to be the case, especially with central banks around the world ready to cut rates.”
Lewis said the prospect of rate cuts, along with the current geopolitical tensions, are supporting gold’s upside potential. “There are plenty of things out there to be worried about so, with that, gold I think is still something that you need to be holding and also buying on dips,” he added.
“I think we are going to go much higher before it is all said and done this year.”
Technical analyst Partick Karim also pointed out in an X post that gold is spending longer and longer above $2,000 per ounce each time it breaches that level.
Enjoying its longest period above 2000$.#xauusd #gold pic.twitter.com/Am6sGQB83f
— Patrick Karim (@badcharts1) February 7, 2024
Spot gold last traded at $2,036.93, and is virtually flat on the session at the time of writing.
