Gold Price Breaks Above $4,500, Targets $4,700

The gold price has broken above its 200-day average, strengthening the near-term outlook. The move above $4,513 marked an important change in the technical picture and increased the likelihood of a further recovery towards $4,700.

Gold's advance was driven by a sharp decline in the US dollar following news that the US Treasury plans to expand purchases of longer-dated government debt. This announcement unsettled investors and pulled capital towards alternative stores of value, with gold benefiting from the increased demand.

According to TD Securities global head of commodity strategy Bart Melek, 'the next step is $4,700 if this momentum continues.' A sustained break above $4,700 would strengthen the recovery and expose the $4,770, $4,780 region. However, technical analyst Bruce Powers identified the April swing high around $4,891 as the larger upside objective.

The first important support zone is now located between $4,500 and $4,516. Holding this area would indicate that former resistance has become support and keep the bullish breakout intact. A daily close below $4,500 would weaken the signal and risk a retreat towards $4,450, followed by the August 14 low near $4,310.