Gold Is Flagging Out – Breakout Rally Targeting $1,950 Or Higher Is Next

After watching the VIX start to move higher last week while the S&P and Dow Jones pushed to new all-time highs, our research team has been actively studying the Pennant/Flag formation in gold that has been setting up. Our “Measured Move” article suggests support near $1,945 will act as a launchpad for an upward price advance to levels near $2,150 or higher.

As the momentum of this upside price move continues to build, as we’ve recently seen with the last upside price leg, we believe the $2,200~$2,250 could be the next real upside price target for gold.

Over the past few weeks, gold has confirmed our projected $1,945 support level by closing out near this level for multiple weeks (August 10: $1.949.80, August 17: $1,947). We believe the ability of the price to close above the $1,945 level -- even though the price traded below this level -- shows how strong this support level really is.

Now that gold has started to rally near the Apex of the Pennant/Flag pattern, we believe the next upside leg could be starting.

This Daily Gold Futures chart above highlights the extended upward price trend and the recent downward FLAG/Pennant setup – flagging out near $1945. We believe the next upside price move could prompt a move to levels well above the $2,200 to $2,250 range as the momentum behind this move continues to build.

Once gold clears $2,200 on an upside price advance, we’ll clearly be in “new high price” territory, and it will shock many investors that gold continues to rally in the face of the US stock market rally. 

The Weekly Gold Futures chart below helps to pinpoint the upper price target range, assuming momentum continues to build as the next breakout move takes place. Our research team believes this next leg may push up to levels just below $2,400 before stalling out again, then likely retrace to levels near $2,250~$2,275 where another sideways/flag pattern may setup. This time, the sideways/flag setup may be very quick in terms of completing; possibly only visible on intra-day charts.

We believe the next upside price rally will have begun once gold closes above $1,985~$1,990 (near the Flag Apex). Get ready, this should be a very solid upside price move targeting $2,250 or higher.