Gold Price Lower Highs Series Puts Pressure on Horizontal Support
The gold price fully reflects the ranges seen in financial markets recently. It hovers at the highs, but not high enough to climb back above the $2,000 mark. The same thing we can say about other markets that failed to advance beyond the highs established in August (e.g., EURUSD).
The recent decline in the gold comes in the context of the market participants dumping safe-haven assets. Gold, but also some safe-haven currencies like the CHF or the JPY, moved lower since the start of the trading week. A COVID-19 vaccine seems within reach, and hope gives way to a rotation from traditional safe-haven assets.
As such, while the tech sector corrects in the United States, the big question is if the gold price correlates with it. If that is the case, we have an explanation for the weakness in the price of gold.
Jerome Powell Today To Set the USD Direction
Later today, Jerome Powell is scheduled to take part in a policy panel hosted by the ECB at its Forum on Central Banking. This event replaces the famous Sintra conference due to the pandemic restrictions.
The Fed is expected to make a move in December, and any hint that may move the dollar will leave its mark on the gold price too.
Bearish Gold Price Technical Perspective
The hourly chart below covers the price action seen in the gold market in the last two-and-a-half months. Not only that the price of gold could not climb back above $2,000, but it cannot break the series of lower highs.
Moreover, it puts pressure on horizontal support seen at $1,850. Because of that, it looks as the market forms a triangle as a reversal pattern, with the focus being on a break below the horizontal baseline.
To trade it, bears may want to wait for a break and hold below $1,850 before going for the $1,650 target. At the same time, a move above $1,950 would invalidate the pattern.