Gold prices (XAUUSD), could not stand the pressure of the US Dollar and the price trend turned bearish in yesterday’s trading session. The price is now bearish below yesterday’s high of $1502, and per the head and shoulders pattern, I reported on Friday the price might now decline to the 1415 level over the weeks ahead.
If gold prices were to revisit the September 10 low at $1483.61, I suspect that traders will see this as an opportunity to short-sell XAUUSD. However, if the price manages to establish itself above the September 30 high of $1502, I suspect that trades will be quick to abandon their bearish outlook.
Download our Gold Prices Q4 Outlook Today!
In the longer-run, the current decline in Gold prices appears to be a correction in an overall upward trend. Gold prices bottomed out in 2016, and spent a few years trading sideways, however, in summer 2019 the price finally breached its multi-year consolidation and this generated multiple bullish targets. The first target is the $1600 level based on treating the 2016 to 2019 period as an ascending triangle, and the $1700 level if we treat the 2013 to 2019 period as a large inverse head and shoulders pattern. These two long-term price targets will be in play as long as the price trades above the July 1 low of $1381.81. Longer-term investors might, therefore, see a larger decline over the next few weeks as an opportunity to load up on gold.
The next key data point for Gold prices is this afternoon’s US ISM report. The index slid to 49.1 in August and is anticipated to increase to 50. If the index would gain more than 50 then it could weaken gold further, while a lower reading than 50 might send gold prices upwards, however, gold prices still need to break above the yesterday’s high to end the short-term downtrend.