Gold erases losses and recovers with risk appetite

Gold regained strength and managed to erase losses on Tuesday during the American session. The precious metal dropped to $1234 (daily low) but then reversed and climbed back toward the $1245 area, where it closed yesterday.

The rally from the lows was influenced by a weak US dollar in the market and also amid risk appetite. Gold turned to the upside when the Dow Jones jumped to test the 18,000 handle.

A test of weekly highs coming?

At the beginning of the week, the value of the ounce of gold rose toward $1250, but it lost strength at $1249.50. Today it rebounded and rose back approaching daily highs ($1246). It is about to end the day modestly in negative territory with a Doji formation in the daily candle chart that continues to leave the door open to the upside.

With the recovery price also climbed back above the 20-day moving average, that stands around $1242. A consolidation on top could give momentum for a test of May’s highs. A clear break above $1250 would expose the next relevant resistance that could be seen at the $1258 zone, followed by $1280.