Michael_Macdonald-XATSUK

Gold poised to break USD1200, but downside tests to remain limit

FX_IDC:XAUUSD   Gold Spot / U.S. Dollar
Gold prices have extended the December 2016 rally. However, buyers are having difficulty sustaining levels above the USD1248.50, (50%) Fibonacci retracement of the July-December fall.

A corrective pullback is now looked for, as the Tension Indicator continues to weaken, with focus turning to USD1200. A close beneath here will turn investors cautious, but critical support at the USD1122.80 low of December 2016 should underpin downside risks, as background studies continue to turn higher.

If broken, however, deeper reactions will be confirmed, as the July 2016 bear trend gathers fresh traction, with congestion around USD1100 to then attract.

A later close above the USD1263.80 high of February will confirm continuation of the December 2016 rally and turn sentiment bullish once again. The USD1278.50, (61.8%) Fibonacci retracement will then come into view, with a further break opening up congestion around USD1300

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