Gold continued to ease higher once again yesterday, with May gold futures on Globex closing at $1613.80 per ounce, up just over $8 per ounce in the session and ending with a narrow spread up candle, supported by average daily volume.

Progress for gold this week has been slow, but at least with a modicum of bullish sentiment, initially triggered by Monday’s price action, which saw the price of gold, not only break and hold above the psychological $1600 per ounce level, but also move beyond the recent sideways price congestion in the $1560 to $1590 per ounce area. This gave gold a much needed boost, helped with the posting of an isolated pivot low on Thursday’s candle of last week in the $1575 area. Since then, the mildly bullish sentiment has been supported by average volumes, and with buyers now in evidence on both the daily and the three day timeframe, the short term outlook remains positive.

From a technical perspective, we are now approaching a key level, and indeed this has already been tested in the last three days, as shown by the red dotted line on the daily gold chart. This is the price level which saw gold reverse from the recovery in late February, and with three failures already at this level this week, is now building to a significant resistance point. For any continuation of the current bullish up swing, we need to see a clear break and hold above this area, which should then provide the platform required to help the precious metal extend this trend further, and push on to test the underside of resistance in the $1650 per ounce level in due course.

Finally, and perhaps most importantly, the chart is now developing a rising triangle formation, which is a classic signal of an impending bullish breakout. The lows of the last few days have been rising nicely, creating this key pattern, as shown by the cyan line, which should provide some much-needed cheer to gold bugs in due course!

Editor’s Note: Equity only readers gain exposure to the gold through the SPDR Gold Shares Trust (GLD, quote) ETF that seeks to replicate the performance, net of expenses, of the price of gold bullion. The GLD trust holds gold, and is expected to issue baskets in exchange for deposits of gold, and to distribute gold in connection with redemption of baskets.  Readers can also access the gold market through the iShares COMEX Gold Trust (IAU, quote) ETF seeks to replicate, net of expenses, the day-to-day movement of the price of gold bullion.

Anna Coulling is a trader with over 16 years experience and founder of AnnaCoulling.com