E Thoughts About Gold Recent Sell-Off

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gold recent selloff

 

The panic state due to drop in gold prices

During the last six days, a decline from $1,900 to $1,760 has been observed in the gold market. This behavior is unusual, and it shows that gold is now in a panic state. This state can last from 8 to 12 days. After reaching the highest price ($2,070), gold has traded between $1,700 and $1,900. But if this yellow metal breaks inflection now, then it will be an escape from the long-term charts. It will result in a decline in the prices of gold. Because of the current panic state of gold, it is difficult to tell what will happen. But according to our chart mining calculations, there is a possibility of the following scenarios that may happen in June or July. 

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Possible gold scenarios in June and July

Due to the recent decline in gold prices, there is a panic created in the gold market. After the 1800 break, there are two numbers in the chart – one is $1,765, and the other is $1,725-$1,710. To summarize all the numbers, $1,680-$1,765 is a long-term mega inflection area. After the $1,680, the price structure will move from the current bull market to the bear market. Until Friday, gold maintained its prices at $1,765. But, unfortunately, its price declined below $1,765 at the last minute of Friday's close. This situation has created the following possible scenarios for the coming days. 

Scenario 1. If Mega Inflection Holds

This is a possibility that the mega inflection area holds in the gold market, then prices may start to bottom in this region in June/July. It is expected that gold bottom in the month of June and July and starts increasing towards the targeted zones. If gold prices bottom at $1,725 or $1,765, then short-term charts will exhibit bottoming actions. This scenario has a 90% chance of happening. 

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Recent selloff in gold

Scenario 2. If Mega inflection is broken 

Gold formed a bottom on the yearly inflection of $1,675 on 10th March’s diverged cycle. Based on our prediction, the gold prices are not likely to cross the $1,675 inflection area. But in case the prices exceed this level, there will be a threat to the long-term bull phase of gold, and gold prices may start declining. Out of all these scenarios, this scenario has the least chance to happen. Its probability is only 10%. 

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recent selloff in gold

For the last seven months, the gold price patterns have been going well. Gold prices reduced from $2,000 to $1,700 as expected and then increased back to $1,900. You should keep in mind that the ascending broadening has a chance of 80% breakouts to the downwards. But we could not see the March breakout of $1,680 coming due to multiple factors. 

Now the current inflection points are getting tested once again. A powerful bearish view will appear in the pattern if these inflection points are broken. Then this bearish view has a possibility of reducing gold prices dramatically. After the March/April 2021 rally, descending broadening was observed. It shows that there is a chance for prices to increase. However, an unexpected issue appeared last Friday when weekly closing prices went below $1,765. Because this happened unexpectedly and at the last minute, there is a chance that it is just a bear trap and soon prices will increase from $1,765-$1,725 level again. 

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