After coiling up for the entire month of July, gold is finally giving technical indications of a breakout, rallying over 2% intraday and moving toward a key resistance level of $4,200.
Although it still remains more than 25% below its all-time January highs, a repeated rejection of $4,000 support has indicated that the next significant test will be on the upside, particularly since the Federal Reserve is out of the way for now.
“The environment is a little bit better in terms of support for gold right now after the Fed meeting,” Samantha Dart, co-head of global commodities research at Goldman Sachs, told Bloomberg News. Still, “tactically, we are not totally out of the woods yet,” she added.
Post-COVID Hangover
Yet the bigger question may be whether gold still offers the protection investors expect when markets sour. A University of Cape Town Department of Finance and Tax study found that gold’s safe-haven and hedging role weakened after the COVID-19 pandemic, particularly against U.S. financial and industrial shares.
