The over 2% gains so far today brings gold back above the crucial $5,000 mark. That's a big psychological win for dip buyers but even more so when you look at the charts. After the sharp pullback from Thursday last week to Monday this week, we are seeing a solid recovery in precious metals in the past few sessions. And gold is a standout in leading that charge ahead of silver this time around.
Looking at the near-term chart:
Not only is gold breaching above the $5,000 mark, it is also contesting a firmer break of the 50.0 Fib retracement level at $5,002 today. And adding to that, we're seeing price action start to creep towards testing waters above the 100 (red line) and 200-hour (blue line) moving averages. That is a pivotal near-term resistance point to take note of. And if buyers can secure a firm break above that, it will switch the near-term bias to being more bullish again.
The gains yesterday may not look like much but $285 at face value represents the biggest daily jump in gold price on record. So, that speaks to dip buying appetite more so than anything else.
As mentioned as well, the latest rebound cannot be compared to a dead cat bounce such as what we normally see with sharp selling and quick nosedive in other assets. That is because the fundamental factors driving up precious metals are still very much in play and underpinning demand. The pullback is largely to do with a case of Icarus flying too close to the sun. It isn't one that is driven by a material shift in the market outlook.
All in all, this can be seen as a healthy correction for gold and precious metals in general. The question now is do we move on to a stronger consolidative phase or skip that altogether and march towards another surging run to fresh record highs?
