Gold- where will it go? A deeper look into it

21 באוק׳ 2022

As the father of the modern economy said back in 1930: " The market can stay irrational longer than you can stay solvent" and this couldn't be more true now with a falling Gold price in a high inflation environment. But there is also a saying for traders:" Trade what you see, not what you think"...

So, what do we see when it comes to Gold?

Looking at the posted weekly chart, we can see that after the recent high and test of the ATH back in March, Gold has entered a downtrend, and is contained in a downwards channel with clear lower highs and lower lows.
Also, we can see a very nice double-top formation with the neckline support clearly broken, so, a downtrend on a longer time frame.

Zooming in to daily:



On daily TF the downtrend is even more clear:
- The rising trend line started in 2018 is broken
- We can see the importance of the 1680-1700 zone with multiple reversals, acting both as support and resistance in the past 3 years, and now this level is clearly broken to the downside.
- The price is under both 50 and 200 MA
- Also we have a death cross at the beginning of July
- The recent rise above 1700 is very well stopped by the 50MA and the falling trendline

Going to H4:



Refining to H4 we can see a double test on the 1680 zone on 11 and 14 November, followed by a break of 1640 support and a test of this broken support and confirming as new resistance yesterday.

So, on all-time frames, Gold is bearish...

But now we are speaking of XauUsd, so what's happening with the price of Gold in general?

XauEur:



- With Eur, Gold is also in a downtrend that started in March
- At this moment the price is exactly in support and a break down looks imminent

XauGbp:



- As in XauUsd's case we have a double top
- The price is also in support and a break looks imminent

Putting it all together: More often than not when we are speaking of the price of Gold we are speaking in fact of XauUsd, but Gold its self is an asset that has trends regardless of Usd's evolution and in this case, all are pointing to a falling Gold price.

In conclusion:
- In XauUsd's case the trend is strongly bearish and a fall under the recent 1615 low is very probable
- There are 2 very important support zones at 1550 and 1450 that can provide targets for swing traders
- Considering selling rallies 1640 and 1660 should be very good points
- This bearish view on XauUsd is intact as long as the price stays under the 1680-1700 zone

Best Regards!
Mihai Iacob