Gold surged higher in Tuesday's session to continue Monday's rally, as ongoing concerns about the US debt ceiling kept speculators and risk-averse investors turning to the precious metals markets. Gold is now substantially above the $1,600 per ounce level, and the day's settlement places it just beneath last week's all-time record high.
This most recent leg up in the price of gold came at the completion of a Falling Wedge chart pattern, when a breakout above resistance at $1,614 per ounce found momentum buying to continue the move. The first push carried gold to the bottom edge of the projected price target of $1,619 an ounce, and so far there has been no retracement after the initial breach.
Momentum buying at the onset of Wednesday's trading session could easily carry the price to the upper end of the forecast range, a price of $1,625 or better. This would exceed the previous high, and could also signal that the market is in a run-away mode against the backdrop of a rapidly falling US Dollar. Traders should keep an eye on the longer term chart pattern developments for signs of a possible larger move with higher targets as the week progresses.
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