Gold in Bullish Continuation After Breaking Above Flag Pattern

Gold Technical Update

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XAU/USD 1H Chart , 6:48AM EDT 6/6/2012

Gold popped up from a recent short-term flag pattern. The demand in gold has been lifted recently due heightened expectation that the Fed and other central banks are considering monetary stimulus. These operations essentially increase the money supply while the supply of gold stays steady. Therefore the value of gold therefore rises.

The breakout from the flag pattern is in the direction of a recent upward trend that started from a large range support seen in the daily chart.

The next resistance is near 1666.50, which is around the 'central pivot of the range. If the market pushes above that and pushes the daily RSI reading above 70, we are likely developing momentum towards the upper part of the range near 1800.

XAU/USD Daily Chart , 6:52AM EDT 6/6/2012

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Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis