Gold Prices Targeting $1800 after Breakout the Previous Resistance Level

Gold rose on Monday to its highest $1758.303, as surging coronavirus infections intensified concerns over a delay in global economic recovery and prompted investors to seek the safe-haven metal. The lowest price on Monday $1741.727. Gold has gained about 15% so far this year, supported by safe-haven demand in the midst of concerns of an economic slowdown and unprecedented amounts of government and central bank fiscal and monetary support, which has reduced bond yields and raised fears about inflation.

From the technical perspective, the price of gold holds within the May range following the failed attempt to test the 2012 high ($1796), and the precious metal may continue to consolidate as the rebound from the monthly low ($1671) fails to produce a break of the June high ($1745). Nevertheless, the technical outlook for bullion remains constructive as the pullback from the yearly high ($1765) reverses just ahead of the May low ($1670) with the Relative Strength Index (RSI) highlighting a similar dynamic as the oscillator attempts to break out of the negative slope carried over May.

Gold's technical picture is not its only headwind as it tests long-term resistance below $1,800 an ounce. Analysts note that the precious metal is entering its seasonally slow period. That is the area that could be extended to the $1775 level, and once we get above there then you could see a move towards the $1800 level. A break above the $1800 level opens up the door to the $2000 level that could be the next move, and that is exactly what I would expect. I like the idea of buying pullbacks because it offers value in gold, so that being said the market remains bullish. However, although bullish sentiment is strong in the gold market, some analysts are warning that the precious metal might not have enough steam to break through its months-long trading range.