Gold prices reached a new multi-year high this morning, and have also reached the target of the ascending triangle I highlighted last week. Because the trend is upwards, the price could continue to add to its gains in the days ahead, but the risk-reward ratio for new long positions is poor. The next potential price target is the psychological level of $1500, followed by the $1545 level which is derived if we treat the bull-leg from the May 30 low to the June 25 high as the flag pole of a “flag pole pattern.”
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In the short-term, the trend will remain bullish as long we trade above the August 2 low of 1429.77. The price is about 60 dollars from the low, and about 54 dollars from the next major targets, hence the risk-reward ratio for a fresh long position is poor. However, if the price corrects 50% of the rally from the August 2, and thereby reaches 1461 level, the risk-reward ratio will improve to 2.54 times the risk.Download our latest quarterly market outlook for our longer-term trade ideas.
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