Gold prices on Thursday went sky high after breaking through the nine-year resistance level of $1612 toz. The last time gold futures temporarily jumped to this level was this January amid the US-Iran military tensions. At that time gold jumped due to the extreme risk of the large-scale military outbreak. Now it is different: markets are more or less quiet and have turned to a positive outlook, despite the coronavirus uncertainties. The CBOE Volatility Index (VIX) that gauges market risk and investors' sentiment is around 15, which is a rather moderate level. Gold is rising together with the Wall Street S&P500 Broad Index and the US Dollar itself, which makes the bullion rally much more interesting. This anomaly could reveal the inside tension of investors who could demonstrate caution in the longer term. This may be caused by rising uncertainties over further trade tensions globally, the disruptions on global supply chains due to a longer than expected coronavirus outbreak and a slowing down global economy. The interest in gold is propelled by large central banks that continue to purchase gold from their FX reserves.
All these factors may confirm a strong upward trend in gold futures prices. Technically, gold futures may continue their rally to dizzying highs of $1680 toz. But, the rapid breakthrough of the strong resistance level amid many contradictive factors may trigger a correction to a support level of $1592.6 toz or reach recent highs.
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