After a long trading session, April gold has extended its two day massive $40 rally, and is currently trading at $1226.6, which means it will still close below its 20-day moving average at $1,229.2. After the quarter percent rate hike yesterday by the feds, gold bulls have to be pleased with the two day rally as the US dollar continues to sell off form a near-term high. When Fed Chair Janet Yellen explained that she wants to see more confidence in the US economy before shrinking the balance sheet, it might have been the key phrase that got gold to rally once again. Basically, her rhetoric was less hawkish than initially anticipated by traders and investors alike.
Let’s keep this very simple. If you take a look at the daily gold chart, you can see yesterday that gold broke above the sharp down trend line and above the weekly high of $1210.0 an ounce. Look for gold to possibly pull back to this break out area of $1,217.0 to $1,210.0 and then extend its rally, but if gold breaks above today’s high of $1234.0, it sets itself up for a rally of the old high of $1,264.9 back on February 27.