Improving Signs of Demand
Nevertheless, rather than being followed by strong bullish momentum, gold has been consolidating with lower volatility. Nonetheless, the long-term bull trend remains intact and is showing signs it may be ready to proceed. A downtrend line for the recent correction that marked potential support following the upside breakout held up relatively well. There were only a few days when gold traded below the line, and it didn’t fall too far below it before finding support around the 20-Day MA.
Rise from 20-Day Moving Average Support is Bullish
The 20-Day MA was last reclaimed on May 21 and gold has largely traded above that line since then. Once the first pullback following a breakout is complete, the trend should be ready to proceed. This week’s price behavior confirms support around the 20-Day line and sets the stage for a continuation of the June breakout. In addition, the 20-Day MA is now above the downtrend line, and it turned up this week after being relatively flat since May 20.
Breakout Above $3,403 Will Confirm Strength
A decisive breakout above the minor swing high at $3,403 will provide the next bullish signal, with strength confirmed by a daily close above that price level. Ideally, if gold is to have a chance to challenge the record high at $3,500, bullish momentum should improve once the $3,403 price level is broken. The next decision point would then be the prior lower swing high of $3,439. A rally above that price level would trigger another bullish reversal signal.
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