On January 6, gold attracted some dip-buying near the $1941 region and spiked to fresh two-month highs in the early European session. The precious metal was last seen hovering around the $1952-53 zone which marks the 61.8% Fibonacci level of the $2075-$1764 downfall.
The development of some new selling pressure around the US dollar was believed to be one of the primary factors that helped the dollar-denominated commodity to regain traction. Gold has moved back into the positive territory for the third consecutive session.
In the meantime, any subsequent positive move might find resistance near the $1960-65 congestion area. Since the RSI on the daily chart is holding slightly above the 70.00 mark, the yellow metal might take a brief pause near the mentioned barrier.
In that context, some follow-through buying will be expected to act as a fresh trigger for the bullish traders and set the platform for an extension of the recent bullish movement. Gold might then aim to reclaim the critical $2,000 psychological mark for the first time since August 2020.
On the other hand, the nearest support has formed near the $1930 zone, and it is closely followed by the 50% Fibonacci level that is located near the $1920 area. Any further drop might be seen as a buying opportunity that, in turn, should help in limiting the downside movement for gold.
Long-Term Elliott Wave Analysis For 2021
Gold made a massive bullish explosion in 2020, and after reaching the 200% Fibonacci target, it has now confirmed the development of a wave 3 instead of a wave C. How far will this uptrend go?
XAU/USD did not manage to confirm a new high in the last 4 months. The uptrend and wave 3 continuation have the best chances in Q1 2021, but a failure to break by the end of March 2021 may indicate that a bigger retracement in wave 4 may happen.
A bullish breakout above the red resistance trend line may confirm the continuation of the upward momentum. However, a bounce at the top may introduce a bigger triangle pattern (grey arrows), with the main target zone being $2,250 and $2,500.
Nonetheless, a failure to break may indicate a severe retracement towards the 38.2% Fibonacci retracement level. But, the uptrend remains a favorite provided that the price action remains above the 61.8% Fibonacci retracement zone.