Gold Gains as Dollar Weakens Further - 21 September 2018

Gold prices ended Thursday’s session up $3.38 an ounce as a lower U.S. dollar index prompted a bit of buying interest in the gold market. The U.S. dollar index dropped to a 2.5-month low yesterday on receding fears of a U.S.-China trade war. World stock markets were mostly higher yesterday. The Dow Jones Industrial Average and S&P 500 set new highs. Investors are awaiting next week’s Federal Open Market Committee meeting.

The short-term charts are bullish, with the market trading above the 4-hourly and the hourly Ichimoku clouds. We have positive Tenkan-Sen (nine-period moving average, red line) - Kijun-Sen (twenty six-period moving average, green line) crosses on both charts. However, there is strong chart resistance, which prevented gold from going higher in recent months, in the 1214-1212.40 area.

XAUUSD Daily

The bulls have to pass through this barrier to set sail for 1218. If XAU/USD successfully climbs above 1218, then the market will probably visit the 1226-1224.50 area next. A daily close above 1226 could trigger a move to 1240/35. To the downside, the initial support stands in the 1206.50-1205.50 zone. If prices fall below 1205.50, the Kijun-Sen on the H1 chart, then the market will return to the 1203.40-1201.20 area occupied by the hourly Ichimoku cloud. The bears have to produce a daily close below 1198 to take the reins and challenge 1195.

XAUUSD h4

Alp Kocak has been trading Forex since 2003. He writes technical analysis based on Japanese candlesticks and Ichimoku Kinko Hyo.