Gold is today breaking out above the important $1235 resistance zone and more importantly is set to close the day above this key resistance zone.
Previously, several bullish attempts were rejected in this area in October. Although intraday Gold rose to as far as $1243 then, it never managed to close above $1235.
The $1235 area is important mainly because of the 200-week moving average as well as the past weekly lows and highs in this area. So, a strong close today with a tall green candle will increase the probabilities that further gains are in the cards for the yellow metal.
So, if things unfold as described above - Gold closes strong today near the highs, we can look to join the bullish move on a retracement on the intraday charts. A continuation of the move higher today seems unlikely as there is no major event to trigger more volatility today and a large move has already occurred for the day. So, some consolidation until the close today seems more probable compared to further bullish continuation.
The obvious level we would look for bullish signals is $1235 which would now act as support. However, XAUUSD may not even come down this far at all so bullish signals slightly higher than this can also set the end of the retracement.
We must also keep in mind that volatile events are ahead of us this week, so large market moves are likely to occur. Mainly, the events that will affect Gold are Fed Chair Powell testimony and the Non-farm Payrolls on Friday.
Nonetheless, the most probable outcome for Gold is still to be higher after those events than lower, hence we are looking for bullish opportunities.
