The price of gold consolidates for a few days now, close to the $1,800 level. However, it has no power to break above the critical level and keeps evolving in a horizontal pattern. It looks like a bearish flag or bearish pennant, and the measured move of either of them suggests another leg lower toward the $1,700.
Gold price had a hard time regaining the all-time high from last year. While it bounced from below $1,700, it was unable to extend its rally above $1,900.
Even the recent US dollar weakness seen on the EUR/USD or the AUD/USD pairs is not enough to trigger a rally in the price of gold. In fact, the US dollar index and the price of gold have diverged recently, and so the Non-Farm Payrolls report remains key for both markets.
The measured move for the pattern is about $100. As such, traders may want to wait for the price of gold to break and close on a daily basis below $1,760. Next, the measured move suggests at least a drop to $1,660, below the earlier double top formed in the first months of the year. On the flip side, a close above $1,800 would invalidate the bearish scenario.
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