No Overhead Resistance, Only Reversal Risk

With no true resistance, let’s face it, the only fear for the bulls is a sudden reversal to the downside with better-than-average volume. We could still get this today, but if it occurs, it will be driven by low volume, which will set up the next “buy the dip” opportunity.

The New Definition of a Dip in a Vertical Gold Market

As we move higher and more vertical, the definition of dip is going to change. Sticking with a 50% correction of a price swing, our “dip” level at current price levels is $4350.27. That’s nearly $200. Welcome to the “new norm”. During the old regime, we were lucky to see $200 over a few months, maybe a year. However, as we move higher the swings will get bigger, the corrections will be greater and it will become a big boys game and remember that gold isn’t going to “split” like a stock does.

Fundamentals Take a Back Seat but Still Supportive

Back to the fundamentals, the mixed trade in Treasury yields is having little impact on gold prices today. The benchmark U.S. 10-year Treasury yield is trading 4.12%, down 0.014.

We didn’t see much of an impact on yields from this week’s initial claims report, but the Commerce Department’s GDP report showed that the U.S. economy grew by 4.3% in the first quarter, which was the country’s fastest pace of expansion since 2023. This kind of growth is likely to keep inflation boosted, which will be supportive for gold prices.

It seems to me that the economy is getting comfortable with inflation and growth, which will keep gold underpinned and the “buy” the dip strategy intact.

Dollar Breakdown Setup Could Add Fuel to Gold’s Upside

Today’s weaker U.S. Dollar (DXY) is also providing support for gold. The greenback is sitting on support at 97.814. Up above, the 50-day moving average at 98.452 and the 200-day moving average at 100.209 are providing solid resistance and controlling the downtrend. We’re at a critical point for the dollar. Our charts indicate the possibility of a steep decline under 97.814 with 96.218 the first target. Gold could pop even higher on this move.