- Gold was seen oscillating in a range through the mid-European session on Monday.
- The technical set-up favours bulls and supports prospects for an eventual breakout.
Gold lacked any firm direction on Monday and seesawed between tepid gains/minor losses through the mid-European session amid a combination of diverging forces. This comes on the back of last week’s good two-way price move between two converging trend-lines, forming a symmetrical triangle on the daily chart.
Against the backdrop of the commodity’s recent strong rally from YTD lows, the mentioned triangle seemed to constitute towards the formation of a bullish continuation pennant pattern and favours bullish traders.
Meanwhile, technical indicators on the daily chart maintained their positive bias, albeit have been struggling to gain any meaningful traction. This, in turn, warrants some caution before placing fresh bullish bets.
Hence, it will be prudent to wait for a sustained break through the mentioned trend-line resistance, currently near the $1721-22 region, which if cleared will set the stage for a further near-term appreciating move.
The commodity might then aim back towards challenging multi-year tops, around the $1748 region, before accelerating the momentum further towards the $1775 intermediate resistance en-route the $1800 round-figure mark.
On the flip side, the downside is likely to remain cushioned near the lower end of the triangle, currently near the $1683-80 zone, which if broken might negate the bullish set-up and prompt some technical selling.
The commodity might then slide further towards the $1660 horizontal level and extend the corrective slide further towards the $1630-29 support zone en-route the next major support near the $1605-$1600 region.