• Gold bulls eye the Sep highs near $1,830 for the weeks ahead. 
  • $1,770 is a key level that bulls need to overcome this week. 
  • Stagflation risks should underpin the precious metal. 

As per the prior week's Gold Chart of the Week: XAU/USD bulls step in, $1,770, $1,790 and then the 200-day MA was eyed as targets for last week, all of which were achieved into $1,800.  

Gold daily chart, prior analysis

The upside projection was based on a longer-term analysis, but also the given the daily bullish close at support and the wick:  It was stated that ''the expectations are for it to be filled in by price action in the next few sessions. The target area for gold is based on a -272% Fibonacci retracement of the 50% mean reversion and corrective range. This comes in at $1,790 with a confluence of the prior structure en route to gold's 200-day moving average.''

Gold's prior 4-hour analysis

From a 4-hour perspective, gold bulls would be prudent to see the price make a move in the direction of the target to break the near term resistance around $1,770. In engaging above this area, there is a higher probability of a bullish continuation for gold this week

Gold, live market update

The price has met the target area but was rejected heavily on the last day of trade last week. The move was blamed on a spike in US yields, Retail Sales surprising to the upside and risk-on appetite. The data likely sent the algos into sell mode as the data pointed to a stronger economy and higher expectations of the Federal Reserve to hike rates sooner than what was priced in. 

However, the real focus has to be on inflation and as well as the energy crisis. Stagflation is a real risk that is bound to start to gain some traction for the week ahead as traders survey a number of macro risks, including China's economy and supply shocks.

''Gold is an ideal hedge against rising stagflationary winds, but market pricing for Fed hikes fails to consider that a potential energy supply shock would be unlikely to elicit a Fed response,'' analysts at TD Securities explained. ''In turn, market pricing for Fed hikes is too hawkish relative to TD Securities' expectations.''

Putting fundamentals aside, technically, the drop On Friday will have sent weaker bulls to the sidelines and we are likely to see some consolidation to start the week off. 

As illustrated above, the price is testing not only dynamic support but horizontal also. This would be expected to hold initial tests and potentially lead to a restest of the prior day's lows of the Doji candle which has a confluence with the 61.8% Fibonacci retracement level near 1,786.

If gold does manage to break the dynamic trendline support, there is still going to be room into the 1,750s where price could find itself stuck in a range, aka, the ''barroom brawl''. 

If, on the other hand, the price holds and moves up beyond 1,770 again, that would be bullish as follows on the weekly chart:

The wick on the weekly chart and bullish close are compelling. The wick would be expected to be filled over the course of the next week from a lower time frame perspective and this leaves the prior tops between July - Sep exposed near 1,835. 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD rebounds, steadies above 1.0400

EUR/USD rebounds, steadies above 1.0400

EUR/USD has staged a rebound and reclaimed 1.0400 during the American trading hours on Friday with the US Dollar Index retreating from the multi-week high it set at above 105.60. Nevertheless, the pair remains on track to close the week in negative territory. 

EUR/USD News

GBP/USD climbs to 1.2050 area, looks to post weekly losses

GBP/USD climbs to 1.2050 area, looks to post weekly losses

GBP/USD reversed its direction and advanced to the 1.2050 area after having dropped to 1.1976 earlier in the day. The pair is still down more than 1% on the day with safe-haven flows dominating the financial markets following the disappointing PMI data from the US.

GBP/USD News

Gold rebounds above $1,800 as US yields fall sharply

Gold rebounds above $1,800 as US yields fall sharply

Gold has regained its traction and recovered above $1,800 after having slumped to a multi-month low below $1,790. Following the dismal PMI data from the US, the benchmark 10-year US Treasury bond yield is down more than 6% on the day, fueling XAU/USD's rebound.

Gold News

Why traders are rushing to exit positions on Cardano’s ADA price

Why traders are rushing to exit positions on Cardano’s ADA price

Cardano (ADA) price has had its performance review as the summer kicks off. ADA bulls are returning home with not-that-good a scorecard, and the underperformance could cut short holiday funding for the cryptocurrency.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!

BECOME PREMIUM

Majors

Cryptocurrencies

Signatures