Gold prices
Gold price was rejected from the $1,870 area yesterday and now consolidates on a possible right shoulder of a head and shoulders pattern. If the market confirms the pattern, the measured move points to new lows, or to a move below $1,760.
Gold is viewed as a store of value. This is one of the main reasons why it was bought in 2020. Also, a weak USD did help for the gold price to make a new all-time high above $2,000.
However, once vaccines against the COVID-19 showed efficacy in preventing contagion, investors turned their back on gold slowly but surely. On the other hand, the USD continues to underperform, as seen in its weakness against major G10 currencies.
Moving toward the end of the trading year, the risk is that investors will exit gold to enter stocks as the end of the pandemic is in sight. Or, at least they will tend to reduce the exposure to gold, if not selling it altogether.
The right shoulder is not completed yet, but the consolidation is not mandatory to take the same time as it took the left shoulder to form. As such, bears would like to sell on a breakout below $1,820 with a stop at the $1,870 highs and targeting a move toward $1,700 or even lower.
