Gold hits highest level since 2012 - what's next?

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  • COVID-19 cases rise in US, Latin America, Germany and more
  • Conflicting data on the status of the US-China trade deal
  • Unprecedented fiscal and monetary stimulus measures worldwide
  • The VIX ("Fear Index" in the stock market) has averaged 40 since the beginning of March
  • US 10-year Treasuries 0.7%

When you identify all the causes of risk in the global financial markets, it is not difficult to understand why gold prices are trading at their highest levels in more than 7 years. The bulls are starting to think about whether the yellow metal can rise to an all-time high above $1900 sooner rather than later.

From a technical perspective, gold finally broke above the two-month resistance at $1,750 earlier this week, confirming a small continuation of the inverted head and shoulders pattern in the process. For starters, this pattern is showing increasing buying pressure and once confirmed by the break above the “neckline”, it presents a target of the same size as the pattern, in this case above $1800.

Gold is at its highest level since 2012 - what is the next target?

Source: TradingView, Gain Capital

As we have learned over the past couple of months, market sentiment can turn in an instant, but as long as gold can hold above the previous resistance-turned-support at $1750, the short-term bias suggests that further gains are possible. On the upside, bulls may look to target the former resistance near $1800 or the move target measured near $1,815.

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