Gold, GLD, GC call points:
- Gold prices is back in the near future resistance previous zone 1804-1808, and the above threatening is a really high level in 1834, which has turned into four increases in the last few months.
- Long-term gold prices continue to trade a formation of a bull flag Given the volatility pattern in trade in August, the door will remain open to open markets.
- The analysis contained in the article is based on pricing and chart formations. For more information on pricing actions or chart patterns, visit us DailyFX education section.
Gold prices have continued for another week, but that hardly says what’s going on here.
There is a close debate about when / if / how the Fed will restrict the purchase of assets, and the background has not been quiet, as the delta option and Afghanistan are producing some risk factors on the horizon. Gold prices have seen two-way volatility against this ongoing risk perception, and the overall cost raises a number of questions about the economic viability of the current recovery.
Another risk factor came to light last week in China with Evergrand, raising another potential concern as central banks anticipate abandoning uber accommodation, which has become commonplace over the past 18 months. We will hear from the Fed on this next week, and here are the key steps that will allow the bank to come up with a plan to reduce asset purchases. The big question is, when will it be announced, when will it actually start, and how much does the Fed want to reduce each month?
This message may come next week. Jackson Hole and the minutes of the July meeting FOMC In making the interest rate decision, it was clear that most Fed members thought they could start reducing asset purchases this year. But that was before the rise of the Delta, the fall of Afghanistan and the emergence of Evergrande. And there was pity NFP in a report released earlier this month and in that Jackson Hole speech, President Powell highlighted the job market as a painful place for the Fed to focus on.
So, it may delay these plans. However, next week’s FOMC is high and gold prices seem to be positioning it in advance.
Golden four-hour price chart
Gold: From Flash Crash to Wrong Breakout
The month of August was especially meaningful for gold prices. It started with a “flash”, causing prices to fall to a low of 1680 in 2021. However, the following weeks showed a recovery and prices rose back to resistance in 1834. Three different tests had previously been conducted in this area and buyers could not break; the august test was the fourth failed attempt to raise this level.
However, as prices withdrew from this failed break, support appeared in a familiar area drawn around 1780, and lasted for most of the previous week until that week. On the back of the morning CPI release, prices will rise to the area of short-term resilience, as taken from the previous support plotted between 1804 and 1808.
This keeps the door open for short-term breakage potential and sets resistance to the level of 1816 and then 1834 as the next highest goals.
Golden two-hour price chart
Gold: long-term points bullish bias
If the noise is shorter, taking a step back can be helpful. From the daily chart below, I look at the formation of the bull flag — which remains in the game. There have been many attempts and possible denials about this composition, but so far each of them has resisted.
In March, the channel seemed to give up. It was not, and instead a double-bottomed formation was built in, which allowed for an increase in April.
With the “flash crash” test of August 1680, which coincided with the center line of the formation, pricing imposes a reversal pattern on the head and shoulders. This is a dirty setting, so I wouldn’t call it an inverse change of head and shoulders, but given the repeated resistance at the level of 1834, which would be a collar, the rising potential of forming nets could be a bull’s flag with a longer setting.
Golden daily price chart
– Written James Stanley, Senior strategist For DailyFX.com
Get in touch and follow James Twitter: @JStanleyFX