Gold prices made an important breakout on Tuesday, accelerating the rally since the start of the week. The sudden spike was due to a combination of thin liquidity due to a Christmas holiday and the retreat in the dollar index back into the red territory. As a result, the yellow metal rallied above the 100-DMA and registered six-week highs around the $1,500 psychological level. After yesterday’s holiday, gold continued the ascent on Thursday and refreshed highs around $1,505.
The question now is if the precious metal manages to confirm the breakout and preserve the latest gains amid low trading volumes due to the upcoming New Year holidays. In general, risk sentiment in the global financial markets looks quite positive now, which may cap further upside in the bullion. On the other hand, market year-end positioning could push spot gold higher in the days to come should the prices confirm a break above $1,500 in the near term.
In a wider picture, the yellow metal shows a mixed-to-negative bias in the monthly timeframes, as the prices struggle to firmly retarget long-term highs above $1,550, registered in early-September. In many ways, the inability to stage a robust and straightforward rally is due to the fact that the United States and China are moving towards striking a trade deal. By the way, the two sides confirmed on Wednesday their readiness to sign the partial deal, which could curb further upside potential in the gold market these days.