A classic reversal pattern for the gold price points to a move well below the $1,800 level. The price of gold currently breaks the neckline of a head and shoulders pattern and looks ready to continue for the measured move. Even the consolidation time in the two shoulders appears to be similar, a factor that reinforces the reversal.
Slowly but surely, financial markets prepare for the December holidays. With only the Fed as the main risk event ahead, the risk for the price of gold is that investors will choose to take profit on its 2020 rally.
Remember that the price of gold broke higher six months earlier than the start of the pandemic, as an early reversal from the highs should not be discounted. While the USD remains offered ahead of the Fed, the vaccine rollout around the world should ease the bullish sentiment around gold.
Gold Price Technical Analysis
The black line on the chart below represents the neckline of the head and shoulders pattern. By projecting it from the highest points on the left shoulder, traders may find out resistance on the right shoulder. If that happens, the market reinforces the reversal pattern. In this case, it happened twice, and now the price breaks the neckline. Bears may want to remain short with a stop at the projected neckline and aiming for the measured move.
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Gold Price Forecast
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