Gold - $1300 is so close yet so far
- Despite the strong technical picture, a break above $1300 remains elusive.
- Risk of potential bullish reversal in USD.
Gold tested the psychological level of $1300 yesterday, before moving back to $1293 levels in the Asian session today.
As discussed here, the metal looks set to test $1335-$1340 ahead of the year-end. Still, a break above $1300 remains elusive. Interestingly, the metal's struggle to break above the psychological mark coincides with bitcoin's meteoric rise.
An argument could be put forward that investors are pouring money into high yielding cryptocurrency space and that is keeping the metal under $1300 amid USD bearish environment. However, there is no credible data to validate the argument.
Still, the metal price may rise on haven demand if the cryptocurrency bubble bursts.
Risk of bullish reversal in USD
Gold's decline from $1300 to $1293 could be associated with the recovery in the dollar index (DXY) from 92.50 to 92.90 levels. The daily chart of the DXY shows a long-legged doji. A positive price action today would confirm the bullish doji reversal on DXY. That could weigh over the yellow metal.
Gold Technical Outlook
Reuters report says, "spot gold may seek a support around $1,292 per ounce, and then resume its rally towards a resistance at $1,301. The metal has briefly pierced above the upper trendline of a wedge, which looks more and more like a bullish pattern. However, only a rise above $1,301 could confirm this wedge, which will then suggest an aggressive target at $1,320. A break below the support at $1,292 could cause a loss into the range of $1,283-$1,288."