Last Year Consolidation Offers Good Profit in Gold in Next month
Gold prices went down by 2.12% to a reach the minimum level of the week, which was $1756.70 on Thursday. The yellow metal did not seem to be high on the list of priorities for investors, as its prices remain in a long, lasting large consolidation that started a year ago.Globally, gold prices depicted a large triangle with a horizontal support line at $1677.90-1679.40 per troy ounce. Those are lows that were reached in March and August this year.
The resistance could be drawn through the high of August 7, 2020 at $2075.57 per ounce and the level of $1834-1838 per ounce. This line is also duplicated by the resistance zone formed during July, August and September highs of this year.
Literally we have a contracting formation that is created by $1677.90-1679.40 from below and $1834-1838 per ounce from above. It is worth noting that the exit of a price from this formation may promise a high profit potential, but this doesn’t mean that it is going to happen in the near future. At the moment gold prices are at the bottleneck of the formation and it may take some time to see when they are going to shoot out. The action signal is going to emerge once the formation is completed and the price crosses its borders.
Such a long shaping of the formation on the weekly and monthly period charts in technical analysis means that the way to the target price will be long. Given a global upward trend in gold prices that has been running since September 2018, an upside exit may be expected, and this triangle would be a continuation figure for this upward trend and would lead to a strong upside jump of gold prices. The nearest targets for gold prices are at $2060-2070 per troy ounce, while possible highs are at $2230-2250 per ounce, and such movements may require months to be completed.
At the moment it is really hard to indicate an exact timing of this shoot out. So, we need to monitor price movements until a clear signal is seen. Until then it is better to stay out of the game, disregarding gold price fluctuations.
The approaching Federal Reserve (Fed) meeting next week is affecting gold prices already. Many Fed members are supporting the tapering of stimulus measures. “There are a lot of members in the FOMC who are in favour of commencing tapering this year and therefore the outlook for gold is not positive,” said Quantitative Commodity Research analyst Peter Fertig, adding that recent data showing U.S. inflation slowed last month was unlikely to postpone tapering.
The resistance could be drawn through the high of August 7, 2020 at $2075.57 per ounce and the level of $1834-1838 per ounce. This line is also duplicated by the resistance zone formed during July, August and September highs of this year.
Literally we have a contracting formation that is created by $1677.90-1679.40 from below and $1834-1838 per ounce from above. It is worth noting that the exit of a price from this formation may promise a high profit potential, but this doesn’t mean that it is going to happen in the near future. At the moment gold prices are at the bottleneck of the formation and it may take some time to see when they are going to shoot out. The action signal is going to emerge once the formation is completed and the price crosses its borders.
Such a long shaping of the formation on the weekly and monthly period charts in technical analysis means that the way to the target price will be long. Given a global upward trend in gold prices that has been running since September 2018, an upside exit may be expected, and this triangle would be a continuation figure for this upward trend and would lead to a strong upside jump of gold prices. The nearest targets for gold prices are at $2060-2070 per troy ounce, while possible highs are at $2230-2250 per ounce, and such movements may require months to be completed.
At the moment it is really hard to indicate an exact timing of this shoot out. So, we need to monitor price movements until a clear signal is seen. Until then it is better to stay out of the game, disregarding gold price fluctuations.
The approaching Federal Reserve (Fed) meeting next week is affecting gold prices already. Many Fed members are supporting the tapering of stimulus measures. “There are a lot of members in the FOMC who are in favour of commencing tapering this year and therefore the outlook for gold is not positive,” said Quantitative Commodity Research analyst Peter Fertig, adding that recent data showing U.S. inflation slowed last month was unlikely to postpone tapering.
