Gold prices have been in a recovery mode since August, when the metal found a bottom at $1,160. Despite the corrective rebound is bumpy and uneasy, the technical picture has improved significantly, especially after last week’s rally that was the most aggressive since March. Yesterday, the precious metal has reached a mid-July high above $1,250, where it was rejected amid profit-taking and dollar demand.
After a brief retreat, the prices have resumed the ascent and could challenge the above mentioned high once again in the short-term as the dollar attractiveness is getting lower. In the longer term, the bullish outlook for gold looks quite sensible as well, considering the declining US Treasury yields.
Another important source of the potential dollar weakness in 2019 is the expected pause in the Fed rate hikes due to the rising economic risks and uncertainty both in the US and globally. As such, should the greenback derail its current upside trend at some point in the future, the yellow metal will regain its safe-haven appeal, though further way north will likely be bumpy and uneasy anyway as gold is yet to restore investor confidence after a plunge earlier this year.
Technically, the prices need to get above $1,250 in the short term, while the key support now comes at $1,234. This level could prevent a more aggressive correction should profit-taking resume in the days to come.