Or a failed recovery?

Gold fell heavily between the middle of April and May but then started to recover as interest rate expectations were pared back. How sustainable is the recovery?

It ran into trouble quite quickly around $1,870, at which point it struggled to gather any upward momentum. But after falling back towards $1,830 today, that may have changed.

A rotation off the 50% Fibonacci retracement level – mid-May lows to late-May highs – which coincides with the 200/233-day SMA band may signal a resumption of the recovery that sees it test last week’s highs.

If so, then perhaps gold could enjoy more of a recovery and a run at $1,900. But that may depend on how the broader markets behave and whether yields and the dollar avoid rising much further.

A failure at $1,850 or $1,870 could spell trouble for the yellow metal, especially if accompanied by higher interest rate expectations and a stronger dollar.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.