Rick Ducat

Gold futures are continuing their strong rally by pushing into new all-time highs, topping out at 2,286.40 late on Sunday evening before giving back a bit of these gains in the premarket. Futures for the yellow metal were up about 13% from the lows on Feb. 14, when the rally started, to yesterday’s close. After some consolidation in mid-March centered around approximately 2,165 based on a node in the yearly Volume Profile study, price is breaking out to the upside once more. This action to the upside is noteworthy because it represents the continuation of an upward move that broke out from a long-term range between 1,680 and 2,080 that began in mid-2020.

In terms of our moving average assessment, price is above many commonly followed moving averages, including the 21-, 63-, and 252-day Exponential Moving Averages, all of which are pointed upward and diverging from each other; this suggests the trend is still geared toward the upside. Momentum indicators, such as the Relative Strength Index (commonly called RSI), also reflect this more positive trajectory. The RSI broke back above the 70 threshold, which represents the overbought level. Typically, this crossover is viewed as a sign of bullishness, and especially so considering the indicator is making new relative highs and snapped a short-term downtrend.

When a product is making new highs, it can be difficult to assess where to find potential resistance. One study that can potentially help with this quandary is yearly Standard Deviation Channels, which creates a yearly Linear Regression Line and then makes channels at standard deviations to the upside and downside from that line. The +3 SDC comes in around 2,291, so this nearby point could be worth watching in the near-term. If price starts to pull back, that area near 2,065 could be worth watching for support.

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