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Gold Shines Bright in the Currency Fog of War

As the People's Bank of China (PBOC) shakes things up and essentially take the first shot in what could become a currency war, we should look at gold as a short-term to medium-term favorite.

Indeed, gold price is climbing sharply in this environment of central bank uncertainty. 

Gold (XAU/USD) 4H Chart

(click to enlarge)

The 4H gold chart shows that the precious metal has been trading in a triangle since making a new low on the year at 1077. This week, it broke above the triangle. After the PBOC devalued the Chinese Yuan, gold confirmed the bullish breakout by bouncing off the 100-period simple moving average an the previous triangle resistance. 

Gold has upside to at least 1142, which was a previous support pivot. The daily chart below shows the next couple of key resistance levels which represent gold price's upside risk in the medium-term, especially if the 1100 area gets tested and passes as support.

Gold (XAU/USD) Daily Chart 8/12
(click to enlarge)