Gold Prices
Gold price regained the $1,900 level and held it well. Despite yesterday’s selloff in the stock market, the price of gold failed to confirm the weakness. In fact, it does just the opposite, consolidating around dynamic resistance.
Will it break higher? Judging by the pattern, it looks like a triangle ready to pop higher to the next resistance level – the apex of a non-limiting triangular pattern.
The recent developments on the USD front led to lull price action. The USD gained against the EUR and other major currencies last week, only to reverse at the start of this one. In other words, ranges in the USD translate in commodities holding tight ranges too.
The fiscal stimulus discussions in the United States stole the headlines. Instead of focusing on the pending U.S. elections, the stock market gyrates on anything related to the fiscal stimulus.
More precisely, yesterday, the Democrats said that there is still no agreement on the fiscal support. Hence, the stock market moved lower, with the Dow dropping several hundred points.
In the meantime, the futures are green and point to a recovery. If the stock market rallies for whatever the reason (new fiscal stimulus might be one), then the gold price may break the triangular pattern and head towards the selling area pointed in the chart below.
The green line below shows the apex of the bigger degree triangular pattern. When the price of gold reached the $2,000 level, it was promptly rejected.
However, investors kept bidding for it on every dip, until it formed a contracting triangle. That one eventually broke lower, and now the market gets ready to retest its apex.
Is the EURUSD price action leading the price action on the gold market? It could be, and if that is the case, bulls may want to go long for $1,950 with a stop at $1,875. Once the market reaches the apex, a short trade makes sense with a target at $1,836 and a stop-loss at $2,000.
