XAU/USD traded higher on Tuesday, breaking back above the 1915 barrier. Although the metal did not rally straight away towards the 1974 barrier, marked by last Thursday’s peak, and instead, pulled back somewhat, it remains well above the upside support line drawn from the low of August 9th. In our view, this keeps the medium-term outlook positive.
We believe that the bulls could take charge again soon and aim for another test near the 1974. If they manage to overcome it, this will confirm a forthcoming higher high and may see scope for advances towards the 2015 territory, defined as a resistance by the high of August 18th, 2020. Another break, above 2015, could carry larger bullish implications, perhaps setting the stage for advances towards the peak of August 6th, at 2075.
Shifting attention to our daily oscillators, we see that the RSI flattened near its 70 line, finding resistance several times there lately, while the MACD, although above both its zero and trigger lines, shows signs of slowing down as well. Both indicators detect slowing upside speed and make us cautious over a possible setback soon before the bulls decide to take full charge again.
We will start examining the bearish case, only if we see a strong dip below 1783, a support marked by the low of January 28th. This could confirm the break below the upside line taken from the low of August 9th, and may initially target the low of December 15th, at 1754. Another break, below 1754, could see scope for more declines, perhaps towards the low of September 30th, at 1722, or the low of August 9th, at 1685.
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