(Kitco News) – Looking at the gold technicals the price has made another push higher but we are pretty far away from the next major level. The price has been on a tear since the market found the narrative that the rise in the 10-year vs inflation highlighted the fact that real interest rates are still not in the best place. The real interest rate is an interest rate that has been adjusted to remove the effects of inflation and this reflects the real cost of funds to the borrower and the real yield to the lender or to an investor. Hence if this is negative or low gold becomes attractive.
On the technical side, the chart has had a clear breakout from the important trendline from the all-time high. Now it seems the upside targets are in focus. The clearest one on the chart is the zone marked in red. This area was used as a massive resistance zone in June 2021. It will be interesting to see if the price has the same kind of reaction or if the bulls can muster up enough buying power to break the area. Beyond that, the only main area of concern is at around $1958-60/oz where is an old consolidation high after the drop from the all-time high.
On the downside, the green area at $1840/oz seems to be the best support area that is closest to the current price level. The trendline retest is also a possibility but it is further away. Beyond that, the main area on the chart is the volume point of control near $1800/oz. This was a massive pivot and at the time it felt the price was never leaving the price area. For now, onward any upward if the inflation situation continues in this trajectory and the Fed does not raise rates at a substantial rate the gold price could keep climbing. Obviously, there is a fair chance a retracement will take place so the market must keep a close eye on support levels that are close by.
