Gold has been holding up pretty well in recent times and we could very well be on the verge of another leg higher.

Price has been stuck in a tight-ish range over the last week or two since it broke the key $1400 level. We’ve seen the yellow metal push as high as $1440, but as yet we haven’t been able to get it to past that point.

At the moment, it looks to me that we are making a flag pattern which is a sign of a looming breakout. That said, price did try once before and was unable to get through the upper trendline that makes the top of the flag pattern. This is not an exact level as such, but there has been selling around the $1420-5 region.

Gold has been getting pushed and pulled by the FOMC and the USD lately. The falling USD has helped keep it propped up and at the same time, the dovish FOMC is certainly helping on both fronts. As we head towards the end of July, the FOMC are now expected to cut rates. The question is just by how much and how many times.

That should keep a bid under GOLD for now and that will likely mean $1400 should hold up nicely as a longer-term support level. The $1400 also coincides with the bottom of the flag pattern so that will end up being a powerful level. That said a powerful level can either hold strongly or break strongly, so either way there will be some action if we push back down.

For now, though I am far more interested at the top end of this pattern. The fact that commodities trend, makes me want to look for longer-term opportunities in the direction of the trend.

So a break of $1425-30 could lead to some further buying here. So far price has really been chopping back and forth in that range and we haven’t really been making too much clear headway. There is also not much data out today that will meaningfully impact the USD, so the ebb and flow might very well continue.

Bottom Line: Technically this is a good looking opportunity for a breakout. We need to see a bit of confirmation though.