Gold price bounced from the recent lows after it formed a triangle as a reversal pattern. In the meantime, it meets dynamic resistance on the lower timeframes, given by the upper edge of a falling channel.
We are in the early trading days of the year, and positioning is not obvious at this point. The consensus is that the dollar continues to decline, and thus the price of gold will rise again. However, there are several things to consider when investing in gold.
One is the fiscal policy and inflation expectations. 2020 brought expansionary fiscal and monetary policy, and thus inflation is expected to rise. If that is the case, gold should act as a hedge against inflation. Another is the relationship between U.S. money supply growth and gold. More precisely, the two go hand in hand, and judging by the pace of money supply growth, the price of gold should find support on each and every dip.
Gold Price Technical Analysis
The technical picture remains bearish at this point. While the bounce is welcomed by bulls, the price of gold needs to advance some more to consider the breakout valid. Bears may want to short against $1,900 and target new lows below $1,800, with the focus on the next USD move.
Gold Price Forecast