August gold (COMEX:GCQ14) seems to have found a base from which to mount a rally from at the 1241.1 level on the chart. Since reversing at this pivotal level, the market has surpassed resistance at 1252.0 and 1260.8, both of which should now serve as support in the market going forward.
Tensions in Northern Iraq are beginning to escalate, which sent the crude oil (NYMEX:CLM14) market skyrocketing overnight. If further violence is seen escalating in that area of the world, the gold market could catch some additional positive momentum as a result. The next levels of relevant resistance on the chart are 1268.4 and 1275.5, with more significant resistance being seen at the 1286.2 level.
The RSI appears to have transitioned to the 80-40 level thus providing further evidence for a bullish case in gold. Despite the relatively bearish intermediate-term outlook, near-term momentum in this market looks as though it may be transitioning to a more positive outlook and upside follow-through on this recent strength is certainly a valid possibility. Continue to look for price to hold the higher high, higher low near-term price action as the precious metal strives to regain lost ground on the chart.
Aug. ‘14 Gold 30-minute Bar Chart (e-Signal)