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Gold price analysis flag breakout and 261.8% collide

Gold price analysis The measured move target for the flag breakout lines up with the 261.8% extension (at 1950-52). This is our long-term goal

Market highlights from the last week

Thursday 30 April: Precious metals held a firm tone into the New York open, but then dipped sharply as position adjustment had an important impact in month-end trading

Friday 1 May: Commodity currencies lost ground with the Canadian dollar dipping after the new Bank of Canada Governor appointment

Monday 4 May: Precious metals drew initial support from the more fragile tone surrounding risk appetite. Gains were hampered by a firm dollar and 0'>gold settled with only marginal gains while silver lost ground

Tuesday 5 May: Spot 0'>gold gained marginally on Wednesday to near $1,705 after holding above $1,700 per ounce, with silver moving above $15.00 per ounce

Wednesday 6 April: Precious metals were undermined by a stronger dollar and failed to derive support from the more fragile risk tone

Gold price analysis

Let us have a look at the technical viewpoint.

Monthly: Risk off appetite resulted in 0'>gold trading to the highest level in 88 months (or over 7 years) in April. The previous swing high is located at $1921 (September 2011). The 78.6% pullback level from the 1921-1046 move is seen at 1734

Weekly: We have a 261.8% extension level located at 1908 (from 1046-1375). Holding within a bullish channel formation. Trend line resistance is seen at 1952

Daily: Mixed trading for the last 16 days looks to be forming a symmetrical triangle pattern. This can also be assessed as a bullish pennant. A break of the trend of lower lows and the target level is 1837 and possibly 1950

Outlook: The technical outlook looks bullish. With the 2nd measured move target for the flag breakout lining up with the 261.8% extension (at 1950-52), this is our long-term goal. Buying at the market offers good reward against risk

Possible trade setup

Action: Buying at market (1692)

Stop: 1655

Target: 1950

Potential return on risk to first target: R6.9 (reward 258 / risk 37)

Daily change
Low: 1723.26
High: 1736.6

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