Gold Breaks Above 1700 – Looking to ECB and NFP

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XAU/USD 4H Chart 11:30PM EDT 8/31/2012

The previous update on gold looked at a market pushing higher with 1700 as the next target/resistance to monitor. This rally indeed materialized followed by a very narrow consolidation under the 1700 handle (seen in the 4H chart). This is the highest gold has been in 6 months.

The break occurred during the Thursday(9/6) European session, ahead of the ECB policy meeting and Draghi's subsequent press conference. Friday's US Non-Farm Payroll data is also a highly anticipated risk event. (Gold gains if the NFP is very poor and makes QE3 more likely). Basically anything that makes the market believe central banks will do something positive should help boost gold / pressure USD. Let's see if these risk events will indeed help gold continue its bull run.

The zoomed out daily chart shows that the market is extending a trendline breakout. Now with price pushing above 1700, the next key resistance pivot is 1790.20, the 2/29 and 2012 high.

XAU/USD Daily Chart 7:35AM EDT 9/6/2012

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

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