Gold price bounced strongly from the lows, in line with the recent developments in the US dollar trend. As the greenback makes new lows against major rivals, gold diverged so far – not anymore.
As the chart below shows, December started with a “bang” for gold. It formed a small double bottom before jumping over $60 in the two days since the month started. The move higher comes in a direct correlation with the decline seen in the USD. The EURUSD and GBPUSD also posted gains against the greenback, fueled by Jerome Powell’s dovish comments.
Yesterday, Powell delivered the first of its two speeches this week. He emphasized that Congress should do more to help the American economy, leading the market to believe that a new round of stimulus is in the cards. That fueled the dollar selling, and the gold price reflects it perfectly.
Gold Price Technical Analysis
The price usually retests the neckline of an inversed head and shoulders pattern. Also, it often retraces to the projected neckline, offering a better risk-reward for patient traders.
As such, bulls may want to wait for the pullback, place a stop loss at the lows, and go for the measured move projected from the neckline. In doing so, a risk-reward ratio of more than 1:2 is easily achieved.
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Gold Price Forecast
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