I see a number of classic chart patterns on the 4-hour time frame for gold.
Do you think the precious metal is about to breakout? And in which direction will it go?
Check out the upcoming turning points I’m watching!
Gold (XAU/USD) 4 hours Chart by TradingView
Gold has formed lower levels than before and found support around the $2,300 level, creating a downtrend line that has been in place for several months already.
The price has returned to test the triangle resistance and may be ready for another bounce to the bottom, as the moving averages indicate that bearish pressure is present.
Volatile market sentiment and changing Fed policy expectations appear to be keeping the precious metal and the US dollar in a hesitant mode, meaning investors are likely waiting for a major catalyst to jump-start the trend.
Will the upcoming release of the June FOMC minutes and nonfarm payrolls report lead to directional movement?
Remember that directional biases and volatility in market prices are usually driven by fundamentals. If you haven’t done your homework on gold and the US dollar yet, it’s time to take a look at the economic calendar and stay up to date with the daily fundamental news!
The Fed is expected to strengthen its hawkish outlook, supporting its decision to trim its expected rate cuts from three to one this year. However, the June jobs report is expected to show a slower pace of hiring, which could revive expectations for monetary easing.
However, stay alert for a possible drop back to the bottom of the triangle near S1 ($2,300.35) if the USD strengthens and possibly even a drop to the next downside targets if the momentum continues.
Looking at the 4-hour chart, we notice a head and shoulders reversal pattern, which may indicate a long-term decline in gold prices, as the neckline coincides with the triangle support.
On the other hand, watch for a potential rally for XAU/USD to the same height as the descending triangle pattern in case of an upward breakout above R1 ($2,346.41) and the dynamic inflection point of the 200 SMA.
Sustained bullish momentum could lift gold to May highs near R5 ($2,445.28) if we see a broad-based decline in the US dollar near major events.
In your opinion, where could gold go?