gold
Gold price did nothing lately. Just like the USD, it consolidated for the last couple of months in expectations of the U.S. elections outcome.
After it made a new all-time high during the summer, the gold price corrected but still keeps an eye at the highs. The initial rejection from the $2,000 level was followed by a horizontal consolidation that looks like a triangular pattern.
The big question on everyone’s lips now – is this triangle a continuation or a reversal pattern?
One of the most interesting correlations this year is the one between stocks and gold. Usually, the correlation is negative. It means that in times of uncertainty, the stock market declines trigger a rise in the price of gold. Not in 2020.
The initial decline in stocks in March triggered a move lower in the price of gold too. Also, when stocks reversed and made new highs, the price of gold rose too, reaching an all-time high as well. Therefore, the positive correlation is likely to hold all the way into the U.S. elections, as investors are unlikely to take unnecessary risks ahead of such an important event.
The technical picture shows a horizontal base at the $1,860 level, from where gold was rejected twice so far. One may argue that as long as the lower highs series persists, the price of gold will put pressure against the horizontal base and will eventually break it.
Therefore, the two key levels to watch on the price of gold before the U.S. elections are $1,960 and $1,860. The first one corresponds to the previous lower high. A break there triggers more upside potential with investors eyeing a new all-time high. The second one is the horizontal base of a possible reversal triangle. A break there triggers a move towards $1,700 as the measured move suggests.
