- Summary:
- Gold price looks weak as we head into the U.S. election date. The technical picture points to a move lower towards the measured move of a triangle.
In a stunning move yesterday, President Trump sent the stock market and the gold price lower. He announced that he ends stimulus talks until after the elections, news that created a bearish stock market reaction and a higher dollar as a consequence.
However, with less than a month before the election day, the best thing to do is not to put much into such news. Yes, the American people need the stimulus. Yes, small businesses will have a hard time without it. But based on what Trump said, there is already an agreement of $1,600 billion.
Effectively, it means that the two parties argue only for the difference. Moreover, whenever politicians say that the talks ended, there is never the case.
Futures Bounce Back, USD Retreats
It comes as no surprise that stock market futures bounced back from the lows. The same president announced after the cash market closed that he stands ready to sign $1,200 stimulus checks, should that option will be presented to him.
As a consequence, the gold price bounced, the stock market futures bounced, and the USD moved lower, as it did the entire week so far. Once again, this is nothing but normal behavior during an election campaign, when the stock market algorithms move aggressively in one direction only to reverse on nothing at all.
Also, because everything these days is correlated with the stock market, the gold price reacts in tandem with it. However, the technical picture reflects the price of gold, reaching a selling point, so bears may want to consider shorting.
Gold Price Technical Analysis
Gold formed a triangle as a reversal pattern by the time it made a new all-time high above $2,000. In doing so, it broke the lower edge but failed to reach the measured move so far. Moreover, the apex of a running triangle was not reached either, something mandatory for any constructive move higher, that the price of gold may form lately.
Hence, bears might consider shorting around $1,900 with $$1,965 stop-loss and $1,723 take profit. For the target to come, bears must give the trade some time.
Gold Price Forecast
