Gold Rises As US GDP Falls

Gold in the long term view still stays in a downtrend channel (blue lines). During last week, traders managed to break the bearish flag (red lines) and following that sign, they aimed south. The downswing stopped on Monday, slightly above the psychologically important barrier at 1650 USD/oz. From that point, buyers took control, reaching first the 1666 USD/oz resistance and yesterday 1683 USD/oz. The upswing was mainly caused by very disappointing data from the US where the GDP for IVQ dropped sharply, much lower than expected. Investors started to buy gold because of its reputation as a ‘safe haven’. Even considering the latest bullish movement, the sentiment stays negative and high prices should be mainly used to open new short positions. That scenario will be cancelled once buyers will manage to escape from the channel down with a major upswing. The closest resistances for now are: 1683 USD/oz and the area above the 38.2 Fibonacci retracement where we can see recent tops. Breaking those will give us a sign that a possibility of breaking a channel down resistance (upper blue line) is increasing significantly.