Gold price’s bullish run continues as the yellow metal keeps holding inside a rising channel. Moreover, it trades with a bid tone, as suggested by the series of higher highs and higher lows that is forming.
However, gold has recently met dynamic resistance above $1,900, forming what appears to be a double top formation. Bears would like to see the price action moving in the lower half of the channel, and, ideally, breaking the previous higher low.
As a traditional hedge against inflation, gold benefited from the higher inflation numbers in April. Both the headline CPI and the Core PCE printed much higher than expected, fueling fears of higher inflation during the summer month. As such, gold bounced from below $1,700, only to threaten a move back above $2,000, its all-time high from last year.
Both bulls and bears have something to trade on the gold market. On the one hand, bulls may want to go long on a bounce from the middle of the channel, having a stop at the lower edge and targeting a new higher high. On the other hand, bears may want to wait for the price to move below $1,850 before going short with a stop at the highs and a take profit set by using a risk-reward ratio of 1:2.
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