E Thoughts About Gold Recent Sell-Off

We expected a gold sell-off from the $1,920s, but the price drop from $1,900 to $1,760 in just six days sent the gold market into a panic. Although the technical and fundamental outlook for the gold market has not changed, the recent price drop appears to be a bear trap. Once the gold panic is over, prices appear to have established a bottom. This type of sell-off is very common in the months of June and July. The area between $1,765 and $1,680 has been discussed as a major inflection point for the recent bull market. Gold is on track to rise in 2021 as long as the inflection point holds. This article will concentrate on a few technical and fundamental factors that may influence gold prices in 2021.

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Reviewing the Gold Market's Recent Decline

This ascending broadening structure was created for the first time in November 2020. The structure was also shared sometimes on Twitter. In the final months of 2020, we discussed with members the possibility that the gold market would experience a maximum pullback to the $1,700 region, with the lower angle of support holding at $1,680-$1,725. The gold market fell from $2,000 to $1,680, where it found support. With the help of our chart mining team, we computed the yearly inflection points in March 2021. The yearly inflection points were $1,675-$1,680, with a diverged cycle low expected on March 10th. The gold market reached its bottom on March 9th at $1,674 and then rallied to $1,900 highs. Prices were smashed again in June after the FOMC meeting, with a $140 drop-in 6 days. However, this drop has not changed the technical outlook at the moment. However, prices are approaching the final time and area, and if this area gives way, the gold market will suffer technical damage. This inflection point's long-term range is $1,765 to $1,680, and a break will cause the market to shift.  

(Click on image to enlarge)

Gold Recent Selloff

Short-Term Gold Cycles

The current short-term gold cycles have been showing 90% accuracy from the moment the bottom was formed on the gold diverged cycle on March 10th. The previous cycles have changed a lot due to which prices of gold have fallen greatly. It is expected that the next bottom in short-term gold cycles will appear on 23 or 24 June 2021. It could be a seasonal bottom which means that lows will be attained through large swings. Note: Because of large uncertainty, it is best to allow a 48-hours deviation.

Keep in mind that a pullback in the months of June or July can be very good for a powerful rally during the months of September or October due to gold seasonal tendencies. This new rally will lead to a huge pullback in October or November, and then it will have a good ending at the end of the year 2021. The inflection points that we have mentioned in this report can breach if gold does not stay in the bull market. If this happens, then gold prices will decline sharply, which will create an unfavorable situation for many people. 

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