(Kitco News) – Despite a couple of disappointing days for gold this week, OANDA Senior Market Analyst Kelvin Wong believes that the technical outlook still favors further price gains for the precious metal.
Technical Analysis of Gold’s Price Actions
Wong observed a mean reversion decline in gold after testing the US$2,420 resistance level. The metal saw a significant 2.7% drop on Monday, the worst daily performance in almost two years. Despite extending losses in the Asian session on April 23, yesterday’s intraday low of $2,291 marked a 5.8% decline from the recent all-time high of $2,431 on April 12.
Analysis of Gold/Copper Ratio
Wong highlighted the Gold/Copper ratio, showing that the ratio has stayed above support since late November. This suggests a relatively higher demand for gold as a hedging asset against stagflation risk amidst a major ascending channel since October 15, 2021.
Importance of the 50-Day Moving Average
The 50-day moving average continues to support the spot gold price, indicating a positive momentum for the metal. The price action remains above the moving average, further supporting the medium-term uptrend phase.
Outlook for Gold’s Price Action
Looking ahead, Wong predicts that a clearance above US$2,420 could lead to the next medium-term resistance at US$2,540. Conversely, a break below the key medium-term support zone of US$2,210 may extend the corrective decline towards the long-term pivotal support zone of US$2,075/2,035.
Additonal Insights on Gold’s Price Action
Despite recent volatility, gold has managed to maintain its levels, showcasing resilience in the face of market fluctuations. This resilience could be attributed to various factors, including geopolitical tensions, inflation concerns, and the ongoing interest in safe-haven assets.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities, or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/or damages arising from the use of this publication.
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