Article by: ETO Markets

As the tremendous volatility in the gold price at the beginning of the US non-farm payrolls week has subsided, the price of gold is back below $... The recent increase in the price of gold can be due to a number of causes. A new surge in safe-haven flows helped the price of gold after Yemen and the US posed new geopolitical dangers over the weekend. The Houthi rebels in Yemen, according to the US military, fired ballistic missiles that attacked three commercial ships in the Red Sea on Sunday.

Given the size of the gold price increase on Monday morning and the fact that the relative strength index is still well within the overbought range, a significant correction is likely still in the works. If the recent retracement breaks through the intraday low of $…, it may get up steam. At the psychological level of $…, there is the next solid support, and floors may reopen for a test of the $… threshold below it.

But with a golden cross in effect, any drop is probably going to be contained and could even be viewed as a nice buying opportunity. On Friday, a golden cross was confirmed when the 50-DMA produced a weekly finish above the 200-DMA. For an advance toward the $… mark to be sustained, there must be a daily closing above the $… level.