The year 2020 is off to a bullish chart for gold bullion. Its price per ounce hit a high of nearly $1,600. Such levels have not been seen for quite some time.
The big question is what happens next over the coming few days. There are already signs of a potential bearish price trend forming.
The Gold Price in the Past Week
Traders will be pleased with how the gold price has evolved. its starting point of $1,5210 on January 1st was maintained without problems. In fact, it served as a platform to push the price higher over the next few days. A very quick increase to $1,530 was noted before some traders began taking profit.
As the week progressed, the price continued to trend higher. At its first peak, it reached a value of $1.575. Following a brief dip, the gold price settled just under $1,560 for a few hours before moving up again.
An attempt to reach and surpass $1,600 was rejected on January 7. Not entirely surprising, as this uptrend materialized far too quickly. A brief retrace drove the gold price down to the previous yearly high of $1,575. The question now becomes if that level is support for a new bounce.
Today’s momentum appears promising in this regard. The price has risen again to just below $1,580. Several technical indicators hint at how the uptrend may not have been broken after all. Most of the markets are rather volatile today, as geopolitical tensions between the US and Iran continue to heat up.
Bollinger Bands: A wide-open Bollinger Bands trend is visible on the hourly chart. Given the current semi-bearish pressure on the market, that is only normal. The Bands show signs of potentially closing soon, indicating the “market dump” could end fairly quickly. When that happens, the overall gold price market sentiment will become more apparent.
Moving Averages: The MA20 remains above the MA50 despite this recent bearish trend. It appeared a small bearish cross would materialize prior to the dump, but it failed to trigger.
This seems to indicate that the price could move up again fairly soon. Despite a bit of red on the charts, there is no firm indication of the gold price trend reversing course. No major price swing is expected in either direction.
RSI: While not the best indicator, it always tells a part of the story. According to the RSI, gold is currently on a slightly flattening downward slope. Not too surprising, as the market entered “overbought” territory overnight.
The previous RSI dip broke the current support level and triggered another $20 loss. This time, the price dropped by nearly $20 from the current high of 2020. There is no confirmation $1,575 will act as support, but it has not been broken in a convincing manner either.