Gold Price Forecast: Gold Threatens To Break, Bulls Nearing Control

Gold Price Talking Points

  • Gold prices have been in a bearish channel for almost nine months now, following an aggressively bullish trend.
  • Gold set its high on Aug. 7, and at the time Bitcoin was trading below $12 thousand and Ethereum was below $400. Have the anti-dollar tides changed for good, or was this a mere respite in the longer-term bullish backdrop for gold?

It’s been a long eight months for gold bulls, but over the next month, their wait may (or may not) be validated.

After an incredible surge through last summer that saw gold prices move to an all-time-high, prices began to pullback in early-August, and that’s pretty much continued since. Over that span of time, investor focus for similar plays has moved into cryptocurrencies, creating wild topside trends that have even seemed to redefine the anti-Dollar trade for many.

Case in point, on the day that gold prices topped, Aug. 7 of last year, Bitcoin (BITCOMP) prices were still below $12,000. Ethereum (ETH-X), which is currently trading at over $3,000 per coin, was trading below $400 back then. And Dogecoin (DOGE-X) wasn’t even trading at half a cent yet, whereas today, it’s threatening a breach of the 40 cent level.

So quite a bit has changed since gold prices have hit that all-time-high, and this has led many to believe that those flows that traditionally would’ve driven gold prices higher have now been directed towards cryptocurrencies or other similar markets.

But take a step back on gold and there’s still a bullish argument, particularly from the longer-term vantage point. Gold prices had become massively overbought when that high was getting set last August, and initially it looked as though that trend may be prone to more of a pullback than a full-on reversal.

At this stage, 38.2% of that prior trend was taken out, and buyers have so far spent the first month of Q2 trying to get back into the driver’s seat. And that eight-month sell-off takes on the form of a bull flag formation, with a support assist by a bullish trendline found by connecting May 2019 and March 2020 swing lows.

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Note: The analysis contained in the text relies on price action and  more

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