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Gold Consolidating ahead of Yellen's appearance

LeighRiley

By LeighRiley
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LeighRiley

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Gold prices have pulled back after the US Dollar rose ahead of the Fed’s Janet Yellen’s appearance before congress today. The concern is that the Fed will maintain its rhetoric around three rate hikes this year, making a non-interest bearing asset such as precious metals less attractive for long term holders. The strong move in equities yesterday evening in the US has since served to dampen the dollar move but added to the angst of those holding the shiny stuff as a “risk-on” sentiment caused further selling.

 

Technically speaking; Gold has reversed the previous short-term downward trend, having formed a double bottom; indicative of the price having moved from making consecutively lower lows to make a higher low. The upward trend is now in place over the medium term and the current price action movement is forming a bullish consolidation.

 

Horizontal support is currently in place at $1219. The price of the commodity is compressing as it consolidates, with potential buyers looking for a break above the diagonal resistance line as a sign of the bullish move with an initial upside target of $1245 and $1260 in extension. A failure for the current buy setup would be considered with a close below $1219.

 

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