Gold Soars To Critical Level: What's Next?

The price of gold has surged recently amid hesitation across major indexes. On Tuesday, it approached a critical resistance zone at the $1,900 mark.

Currently trading down about 8% from its August all-time high of $2,075 and up 13% from its March low of $1,678, a move above the $1,900 level could give gold a chance to run back toward $2,000 an ounce.

Summer is also a typically strong season for precious metals and if gold can make a close above its overhead resistance, the smart money may start to enter into miners.

Barrick Gold Corp GOLD, Kirkland Lake Gold Ltd KL and Newmont Corporation NEM are among some of the largest mining stocks that may benefit from higher gold prices.

See Also: 3 Stocks To Consider For The Gold Rally

The Gold Chart: On Tuesday afternoon, gold prices rose just under 1% and wicked just under $1,900. Gold is trading above both the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending above the 21-day EMA, which are both bullish indicators.

Gold is also trading above the 200-day simple moving average which indicates overall sentiment in the precious metal is bullish.

Gold has traded between support at $1,863 and resistance at $1,900 for the last seven trading days, not closing below its support and also not able to pop over resistance.

Gold’s relative strength index (RSI) is registering up at 76%, which indicates it is in the overbought zone. Traders and investors may want to see gold’s RSI drop back below the more comfortable 70% level to feel more confident in a larger move to the upside. A consolidation period after today’s move would help to cool gold’s RSI.

Bulls want to see gold close about the important $1,900 level for a move up back toward $1,943. If gold could clear that level and use it as support, it has room to trade back near $1,980.

Bears want to see gold continue to reject its overhead resistance and for it to fall back toward support at $1,863. If gold was unable to hold that level as support it could revisit the $1,831 mark.

(Photo by Jingming Pan on Unsplash)