(Kitco News) - With gold’s rebound extending to its fourth consecutive session on Tuesday prices are proving to be well supported above $2,000 per ounce, but a significant correction could be in the cards before the precious metal makes new highs, according to Justin Low, currency analyst at ForexLive.
“With the dollar sagging slightly today, gold is finding reason to cheer on the rebound from last week,” Low said. “The precious metal is up another 0.4% today to $2,026 as it has now erased its post-CPI drop.”
The current rebound came after buyers successfully defended the 100-day moving average last week, driving gold back above $2,000 per ounce. “And the run higher has since gathered pace with gold now just down 0.6% on the month,” he added.
“The volatile action in gold to start the year is a reflection of the big swings in market odds on central bank rate cuts pricing,” Low said. “And as things are settling down now a little with traders readjusting, gold is still finding itself supported.”
The analyst said gold’s ongoing support, even after the Fed’s reaffirmation of their higher-for-longer rate policy stance, “bodes well for the precious metal in the bigger picture,” but he still sees “lingering concerns from a technical standpoint.”
“The rebound off the 100-day moving average has been a textbook trade for chartists,” Low wrote. “But there is a potential pattern forming which is showing lower highs and lower lows. That could come back to bite at gold for a bit before we can really talk about a major breakout to $2,100 and beyond again.”
Low said that for the time being, gold’s upside momentum “might be capped closer to the trendline resistance near $2,053.”
Spot gold last traded at $2,027.49 per ounce, up 0.47% on the day at the time of writing.
