Gold prices entered a downtrend in mid-April 2018 and more recently consolidated in the $1215.00 to $1180 range. Last week’s panic in US share markets pushed many investors toward traditional safe havens, particularly gold. 

Gold prices broke out of the narrower range and reached a 3 month high. There is a chance this precious metal could shake off its longer term bearish trend if several conditions are fulfilled.

On a daily chart, the gold prices are approaching $1235 (Fibonacci 38.2% retracement). Further, the MACD indicates a ramp up of buying momentum. Taking a closer look, a bullish candle appeared on Monday 15/10/2018 that threatened to break the resistance level. If market volatility is back and is here to stay, investors may continue to lean towards safe havens. It is possible that the resistance level may be breached and the next resistance level to watch would be around $1280 (Fibonacci 61.8%).

However, a pullback on gold prices is also possible if investors start slowly drifting back to risk assets on better market sentiment. If that is the case, a key support level to watch would be around $1200.