Bulls have been panting and panting for the past three weeks but have yet to open the door for a stronger technical breakout. Gold prices have been consolidating in a tight range lately and it is safe to say that the next trade is to go with the breakout that comes.
Gold Daily Chart (XAU/USD)
I will continue to point out that there is a certain unease in the gold price rally this year. This is because the rally has been fairly one-sided with little to no pullbacks. There have been consolidation phases like the one we are experiencing now and also from April to June. However, there has been no meaningful correction to the sharp rally in 2024.
This bothers me a bit even as a bullish gold bull. It looks like a healthy correction to the jump higher is due, but even then it will only be a buying opportunity on the dip. At this point, this is the only warning sign I can attribute to gold on the charts.
But at the same time, it is not surprising to see gold continue to rise considering all the factors in play. China may have said that it has stopped buying gold for the time being. However, we are talking about China here. So, I have reservations about its actual motives and transparency.
Otherwise, the structural outlook remains intact for gold as we look to the Fed to start its rate cutting cycle next week.
As for the bigger picture, it will be interesting to see how this wave of gold buying develops as we approach the seasonal buying wave in December and January. If the wave continues, it could complicate the seasonal outlook when the time comes.