Let's put Gold under a technical microscope. In March 2017, gold ran on the perfect storm.
Leading up to the hike in interest rates, the price of gold pulled back from a high of $1,264.90 to $1,200 on fears the yellow metal would quickly fall out of favor. Instead, shortly after that pullback, it caught and held double bottom support at $1,200 where buyers began to accumulate the metal on global uncertainty with elections.
Shortly after, gold prices would run back to $1,261.
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Nowadays, as we can see in the chart, gold could do one of two things. One, it could fail at triple top resistance just under the 200-day moving average, which is possible given the over-extension on momentum indicators like relative strength (RSI) and Williams’ %R (W%R). Both are both sitting in overbought territory.
Or, two, it could break well above that triple top and potentially challenge a previous high of $1,300. From what we can see, there’s no real resistance to that point once gold breaks above $1,264.90. It also depends on political and global issues, too.
Gold prices also depend on the strength of the U.S. dollar, which is currently on a downtrend.
After failing at 102 double-top resistance the dollar has fallen well under 100 to 98.98. It could potentially fall to its 200-day moving average at 98.44 before long. Should that fail to hold as support, the currency could see a retest of 96, which it tested in November 2016.
By watching the movement of the US dollar, along with the Williams' %R (W%R), MACD and RSI, you can get a better idea of overbought or oversold conditions. At present, all three are over sold, suggesting a potential near-term bounce to the upside.
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