Gold's seasonal support may be waning but technical signs continue to look solid

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Gold is up by nearly 3% to start the new year

A lot of the buying tends to be correlated to demand ahead of the Lunar New Year, which begins next week, so the argument for that grows less strong from now. That said, there’s also a case that the buying extends into February as seasonal patterns indicate that gold has ended February on a positive note for 10 out of the last 15 years. For the case of January, it is 11 out of 15 so February isn’t exactly a bad month either for bullion.

Nonetheless, even without seasonal support, gold has a lot going for it at the moment.

The most notable of which is dollar weakness on the back of a dovish Fed. But a bigger positive signal is that technical indicators continue to hold firm. Gold formed a “golden cross” earlier this month in what is almost always taken by traders as a strong bullish signal and now the 100-day MA (red line) looks to be moving towards crossing over the 200-day MA (blue line) in what will only help to reaffirm the bullish run here.

Aside from that, gold also moved above the pivotal $1,300 handle and climbed above the June highs posted around May and June last year as buyers continue to show more conviction to the upside. Price is looking to secure a firm break above the 76.4 retracement level @ $1,316.88 now and if buyers manage to hold above minor resistance @ $1,326 I reckon the upside in gold still has some decent momentum going for it towards the highs seen in April last year.

This article was originally published by Forexlive.com. Read the original article here.