Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets, CFDs, OTC options or any of our other products work and whether you can afford to take the high risk of losing your money.

Chart of the Week – The surge in gold may face a pause

Gold surged by more than 15% from its November low to a six-month high due to the sharp decline in the US dollar and the US bond yields in the wake of two consecutive cooling inflation data. China’s reopening optimism has also sparked bullish bets in both industrial metals and precious metals. In the new year ahead, gold may become a major haven asset again as recessionary risks arise. In a weekly view, the strong upside momentum may take gold to test a further pivot resistance of 1,900 again. However, an imminent pullback may occur from a technical perspective.

Gold (cash), daily (Facing a near-term channel resistance)

Source: CMC Markets as of 9th, Jan (Click to enlarge the chart)

Despite strong bullish factors in gold, the precious metal may face a short-term pullback risk from a technical perspective. In the daily chart, gold has been moving in an ascending channel since late November, facing an imminent resistance of 1,877, which is the high seen on June 13. The near-term support may confluence with the 20-day moving average, pricing between 1,800-1,815.

In addition, the uptrend in gold is forming a potential bearish divergence with the RSI, which is on its downtrend from the overbought territory, again suggesting the upside momentum in gold might be exhausting. 

On the flip side, a breakout of the pivot resistance of 1,900 might take gold to spike further to reach the next resistance of about 1,973. 

Background image

Find your flow: four principles for trading in the zone

Learn about the four trading principles of preparation, psychology, strategy, and intuition, and gain key trading insights from some of the world's top investors.

Get this free report
Mobile trading app

Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.