Gold Could Be Trying to Shine Again
Today we’re considering the weekly chart of gold, which could be trying to shine as 2022 draws to a close.
The main pattern is the $1,800 level, which emerged as resistance in November 2011 as the yellow metal ended its last major bull market. XAUUSD remained below the level for almost an entire decade, then surged back to break it as the coronavirus pandemic triggered a wave of easy monetary policy.
It would fluctuate on either side of that key level for the next 24 months and tanked as the Federal Reserve hiked rates earlier this year.
But then something interesting happened: Prices found a floor above $1,600. That was roughly a 50 percent retracement of the move between August 2018 and August 2020. It was also a significantly higher low relative to the troughs in 2015 and 2018.
XAUUSD built that support for over a month as it pushed against its falling trendline.
What happened next was even more interesting: October payrolls and unemployment beat estimates. It should have been hawkish for the Fed, bullish for the dollar and bearish for gold. But just the opposite happened, and prices broke out the subsequent week.
They then formed an ascending triangle around $1,800. XAUUSD is now attempting its first weekly close above $1,800 since the latest move began.
Finally, you have changes in the global reserve-currency system. U.S. Treasuries, which essentially served as gold for the past century, remain in a bear market. Meanwhile, the World Gold Council reported that global central banks purchased a record 399 tons of gold in the third quarter (up more than 100 percent sequentially.)
In conclusion, gold has recently managed to make a higher low, escape a falling trendline, rally and challenge major resistance. It’s done this despite news that should be bearish. That could raise the question of whether a bigger and more historic move could be starting.
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Important Information
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. You Can Trade, Inc. is also a wholly owned subsidiary of TradeStation Group, Inc., operating under its own brand and trademarks. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
The main pattern is the $1,800 level, which emerged as resistance in November 2011 as the yellow metal ended its last major bull market. XAUUSD remained below the level for almost an entire decade, then surged back to break it as the coronavirus pandemic triggered a wave of easy monetary policy.
It would fluctuate on either side of that key level for the next 24 months and tanked as the Federal Reserve hiked rates earlier this year.
But then something interesting happened: Prices found a floor above $1,600. That was roughly a 50 percent retracement of the move between August 2018 and August 2020. It was also a significantly higher low relative to the troughs in 2015 and 2018.
XAUUSD built that support for over a month as it pushed against its falling trendline.
What happened next was even more interesting: October payrolls and unemployment beat estimates. It should have been hawkish for the Fed, bullish for the dollar and bearish for gold. But just the opposite happened, and prices broke out the subsequent week.
They then formed an ascending triangle around $1,800. XAUUSD is now attempting its first weekly close above $1,800 since the latest move began.
Finally, you have changes in the global reserve-currency system. U.S. Treasuries, which essentially served as gold for the past century, remain in a bear market. Meanwhile, the World Gold Council reported that global central banks purchased a record 399 tons of gold in the third quarter (up more than 100 percent sequentially.)
In conclusion, gold has recently managed to make a higher low, escape a falling trendline, rally and challenge major resistance. It’s done this despite news that should be bearish. That could raise the question of whether a bigger and more historic move could be starting.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. You Can Trade, Inc. is also a wholly owned subsidiary of TradeStation Group, Inc., operating under its own brand and trademarks. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
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