Gold breaks above the $4,120 resistance with strong volume

Gold climbed to a fresh 4-week high of $4,170 on Wednesday morning, extending its bullish move after breaking above the key resistance level of $4,120. The precious metal had failed to clear this barrier several times over the past two weeks. At the time of writing, spot gold was trading near $4,160.

Precious metals rally on hope of a US-Iran deal

Gold’s upward momentum accelerated during early Asian trading following reports of a possible interim agreement between the United States and Iran to reopen the Strait of Hormuz. The reports pushed oil prices sharply lower, easing concerns about inflation and reducing expectations that additional interest-rate increases may be necessary.

At the same time, weakness in the US dollar amplified gold’s gains. The US Dollar Index has struggled to recover following its recent sharp decline, making dollar-denominated gold more affordable for international buyers and reinforcing the breakout.

Looking ahead, gold investors and traders will closely monitor the release of the US ADP employment report and the ISM Services Purchasing Managers’ Index. Movements in US Treasury yields and broader market risk sentiment are also likely to influence the dollar and provide further direction for gold prices.

Gold, the former resistance, has now turned into a support level

The precious metal has broken above the previous resistance zone near $4,120 following several unsuccessful attempts. This level is now expected to act as a key support zone. The bullish candlestick pattern suggests that the upward trend may continue as long as the price remains above this new support. Momentum is likely to remain positive while gold trades above the $4,100 pivot level. With buyers currently in control, XAU/USD could advance toward the primary resistance level at $4,200.

In the near term, a sustained move above $4,180 will be crucial for bulls seeking to test the next major resistance zone at $4,200–$4,220. On the downside, firm support is forming near $4,120. A break below this level could expose the next major support areas at $4,100 and $4,080 later in the week.

 

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