Gold registers an impressive rally after it broke above the 1,357 yearly higher as bids were throwing like there is no tomorrow for the yellow metal. Short covering also helped for the gold to reach 1,394 a level that we haven’t seen since 2013. USD weakness is the catalyst for this rally, as FED opened the door for cuts before the end of the year.
The momentum is clearly bullish for gold prices as it holds above all the major daily and weekly moving averages. Our only concern is that it has reached overbought levels, so a pullback looks possible. The immediate support for the yellow metal stands at $1,357 the previous YTD high, while more solid support can be found at the $1,310, the low from early April. On the upside resistance today’s high at 1394 is the nearest important resistance level followed by the 1,400 round figure. I am cautious on gold at current level, as a retreat can’t ruled out, and will go long only if the precious metal breaks above 1,400.