How Is Future Strategy after Gold’s Sharp Rally?

WikiFX News (10 Aug) - Gold prices broke the barrier of $2,000 per ounce for the first time last week but saw a pullback on Friday. What strategy is acceptable for investors in future tradings？

Although the theme of bullish gold is far from new, the aggression occurred last week indicates that purchases for gold remain strong even in the absence of direct and significant drivers. The dollar’s weakness can explain at least some of the market fluctuation in last week.

Such pullback may continue through early this week, but the bigger question is, what will happen once gold prices ease back around the support level？ In terms of two potential support zones, the nearest one is 1987.95-2009.10, which straddles the 2000 psychological level; while the other deeper one is 1920.94-1941.25.

Long-term strategies may face challenges in such background. According to the monthly chart, RSI is now at its most overbought state since 2008, approaching to the level registered ahead of the Financial Collapse. Therefore, it is not an area for traders to get comfortable, even gold prices have achieved a new all-time-high from the level of $2000.

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