Gold Prices: 3 Charts Every Gold Bug Must Watch

Decline in Gold Prices May Be a Blessing in Disguise

Over the past few months, the price of gold has lagged a bit. We’ve also heard a lot of noise about how the yellow precious metal may not be worth holding, and that it could go down a lot.

So, could gold prices actually drop?

Gold prices 2021

Don’t get too boggled by the noise. The decline in the price of gold may be a blessing in disguise for investors.

Obviously, time will tell us more, but look at the following three charts. They say gold prices could be setting up to make a move to the upside, and that the downside risk may be very little.

Near Term: Double Bottom Forming on Gold Prices

On the daily chart, on the surface it seems like bearish sentiment is prevailing in the gold market.

Currently, gold trades below its 50-day and 200-day moving averages. This suggests that both the short-term and longer-term trends are pointing downward. The momentum indicators suggest that there may be more sellers than buyers in the gold market at the moment.

However, don’t ignore what has happened to gold prices between early March and now. We’ve seen the formation of a double-bottom pattern; this is when a price has touched a certain level twice and has bounced higher. In the case here, the gold price level around $1,675 has held strong.

The next level to watch could be $1,750. A sustained move above that level could be a very bullish signal.

Chart courtesy of Stockcharts.com

Medium Term: Upward Trend Persists

For the medium term, the gold chart looks bullish.

Remember the most basic rule of technical analysis: the trend is your friend. As it stands, a bullish trend is prevailing. It began in late 2018. Gold prices continue to make consecutive higher highs and higher lows.

As for the downside, there are three support levels that could be worth watching if this trend breaks: $1,675, $1,550, and $1,375.

Chart courtesy of Stockcharts.com

Long-Term: Massive Move Could Be Brewing

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Disclaimer: There is no magic formula to getting rich. Success in investment vehicles with the best prospects for price appreciation can only be achieved through proper and rigorous research and ...

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