Gold price is up slightly today due to broad-based optimism on a new stimulus from the US Congress. The US Dollar fell across the board as investors await further comments from both sides of the divide to serve as catalysts for direction.
On Sunday, House Speaker Nancy Pelosi seemed to provide the greatest hope yet of a deal when she indicated optimism that a stimulus bill would pass in Congress before the November 3 election. Pelosi has led the dissenting voices against the Republican proposals, saying they were not far-reaching enough. The previous package expired on July 29 and markets are hoping a bill would sail through before Americans go to the polls in less than three weeks.
Gold price is up by half a percent at 1908.55.
Technical Outlook for Gold
Gold price, as depicted on the XAUUSD daily chart, shows price in a consolidation pattern, as the boundaries formed by the highs and lows have evolved into a symmetrical triangle. Today’s upside push which emanated from the 1900.76 support, has found itself capped by the 1918.68 resistance.
The decision is on whether gold price will break to the upside or downside. Today’s downbeat GDP for China signifies that global economic recovery is far from over, which may favour risk aversion and further upside on gold. Technically speaking, the last two price candles are locked in a bullish engulfing pattern. This also favours a bullish breakout. If this bullish breakout occurs, then 1940.15 could be the next target, with 1954.77 and 1969.95 also on the cards to form potential future targets to the north.
On the flip side, a breakdown of the triangle could push towards the 1880.00 price level, with 1869.39 and 1821.55 looming on the horizon as potential future targets. It is also possible that price could oscillate within the range formed by the 1918.68 price ceiling and the 1900.76 price floor corresponding to the triangle borders) before a break of the triangle.