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2 Key Levels Gold Bulls Must Conquer Now

By Kira Brecht

Tuesday January 17, 2017 09:33

charts can be seen on the site..

http://www.kitco.com/news/2017-01-17/2-Key-Levels-Gold-Bulls-Must-Conquer-Now.html

(Kitco News) - Jan 17 – With just days to go before the U.S. inauguration of Donald Trump, shock waves are beginning to filter through financial markets. The U.S. dollar index tumbled and gold prices surged Tuesday morning, in part, fueled by concerns about the stability of Europe and U.S. support of the European Union.

Gold, long considered a safe-haven asset, especially in times of political, economic and military uncertainty or action, has climbed sharply in recent weeks.

European leaders were jolted on Monday amid President-elect Trump's comments regarding NATO and the future of the European Union opened the door to a potential breach in transatlantic relations, the Washington Post reported.

Europe faces a number of key elections in 2017 in France, Germany and the Netherlands. As rising populism continues to sweep across the continent, economic and political stability in Europe is at risk.






Gold Technical Outlook

The macro backdrop is improving for gold as heightened uncertainty of all stripes moves to center stage.

The Bullish Take:
•Gold has formed a "V" bottom on the daily chart.
•The short-term trend has improved as the Comex February gold futures contract is trading above its 20-day and 40-day moving averages.

Key Challenges for Gold Bulls

Looking ahead, the gold market faces a number of key technical challenges. In order to firmly shrug off the post-election sell-off and shift the focus firmly back to the upside, the burden is on gold bulls to:
•Climb back above the 100-day moving average at $1,247.20
•Scale the 61.8% Fibonacci retracement of the post-election sell-off at $1,258.20.



Daily momentum is nearing overbought levels, with the 14-day relative strength index (RSI) at 69% on Tuesday. The current rally wave may be moving higher on fumes.

Support Zones: On the downside, support lies at $1,201.00 and then $1,187.50. Technically, a pullback and consolidation phase would be "healthy" for the short-term rising uptrend in gold. Backing and filling action would allow gold to work off its nearly overbought momentum readings and leave the market better positioned for an attack on the larger resistance levels.

Big picture: Gold bulls, don't fret – 2017 is just getting started.