Gold price extends rally above $1120

New York (Jan 26)  After a pullback toward the $1110 area, gold gained momentum and jumped back to the upside, hitting a new high at $1122.80, the strongest level since November 4. The yellow metal has risen despite risk aversion.

Today the yellow metal started to rise during the Asian session amid tension across financial markets, but then, as stocks rebounded it continued to rise. At the moment, Wall Street is posting strong gains. The Dow Jones is up 1.62% and the Nasdaq gains 1.05%. The demand for gold did not ease despite risk appetite.

Gold buyers are speculating that the Federal Reserve will take notice of the ongoing woes in China during their ongoing meeting, and, therefore, refrain from hiking rates in March. No change in rates is expected tomorrow when the FOMC meeting ends.

Technical outlook

“From a technical point of view, the daily chart shows that the price is currently extending above its 200 DMA, for the first time since late October, while the technical indicators present strong upward slopes within positive territory, suggesting some further gains in the bright metal”, said Valeria Bednarik, Chief Analyst at FXStreet.

She notes that support levels might be seen at 1118.90, 1113.05 and 1109.60 while resistance could be located at 1124.70, 1130.10 and 1142.50

Source: FXstreet