Gold price bounced this week on the back of a declining dollar across financial assets. The trigger, unsurprisingly, was the new round of fiscal stimulus revealed approved by the U.S. Senate over the weekend and confirmed by the House yesterday.
Higher stocks and the lower dollar are the main themes of the week, and the price of gold bounced from the lows in sympathy. While it did not advance as much as stocks did and remains well below its 2020 highs, the recent price action is encouraging for bulls. The market formed multiple bullish signs, suggesting a bottom may be in place.
Gold was “mocked” by Bitcoin investors lately. The precious metal suffered from a sharp selloff, while Bitcoin recovered close to its all-time highs. If this is a return to the lower dollar mantra, then gold has more space to recover.
Gold Price Technical Analysis
Two bullish patterns formed recently on the gold 4h chart. First, a falling wedge. Second, a bullish flag that acted as a continuation pattern.
At this point, gold price has met dynamic resistance. Bulls may want to add to the long side on a clear break of the $1,750 level and target a move above the upper edge of the falling channel. On the flip side, a move below the lowest point in the wedge will invalidate the bullish scenario.
Dow Jones Daily Chart