At the market open on Monday, 5 January, gold price (XAU/USD) formed a bullish gap. The sharp rise was driven by market reaction to confirmed reports of U.S. military intervention in Venezuela and a forced change of power in Caracas.
News of the capture of Nicolás Maduro by U.S. special forces pushed gold prices up to $4,430 during the European session, and the upward trend may persist into the U.S. trading session. The chart indicates rising demand for safe-haven assets, as market participants may be concerned about further escalation.
Technical Analysis of the XAU/USD Chart
On 26 December, when analysing the gold chart, we:
→ identified an ascending channel;
→ highlighted the $4,400 level;
→ suggested a scenario of bullish momentum exhaustion and profit-taking on long positions, which could lead to a pullback.
Indeed, since then a significant correction has developed, during which:
→ the price (marked by an arrow) expanded the ascending channel to the downside (its former lower boundary became the median line);
→ the $4,400 level acted as resistance on 30 December and 2 January.
However, the geopolitical drivers described above contributed to the following:
→ bulls used the lower boundary of the expanded channel as support to resume the upward move (with a bullish Inverse Head and Shoulders pattern forming on the chart);
→ the $4,400 resistance level was broken and may now act as support.
In the short term, it cannot be ruled out that the XAU/USD price may rise towards the median of the indicated channel.
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