Gold market set for continued upward momentum

The quarterly chart below shows a strong bullish picture for the gold market in the long term. This bullish outlook is highlighted by the emergence of a bullish pennant, drawn from 1980 to 2000, which broke to the upside with a strong rally to record highs in 2011. After hitting record highs in 2011, a cup and handle formation emerged and broke around the $2,075 region, signaling the start of a new upward leg. The emergence of both the bullish pennant and the cup and handle pattern are historical bullish price developments, indicating the continuation of upward momentum in the long term. Additionally, the quarterly chart shows that June 2024 closed at higher levels, suggesting that the third quarter is likely to be bullish for gold.

To further understand this long-term price behavior, the monthly chart below shows the emergence of an inside candle for June 2024. This monthly candle indicates that prices are compressing at higher levels, and a break higher could signal a strong move to the upside. The bullish pennant pattern and the cup and handle formation underscore the long-term bullish trend and highlight the potential for continued upward momentum in the gold market in the third quarter. Therefore, any price correction should be considered a buying opportunity.

In the short term, the gold market is poised to be influenced by several factors. The weaker US Dollar during the early European session has provided momentum for gold prices. Traders bet on a potential interest rate cut by the US Federal Reserve in September after the US employment data. Additionally, political uncertainties in France and geopolitical tensions in the Middle East enhance gold's appeal as a safe-haven asset. However, the People’s Bank of China’s decision to halt gold purchases for a second consecutive month in June could exert downward pressure on gold prices in the short term. Traders will closely watch Fed Chair Jerome Powell's for further cues. Moreover, the upcoming US Consumer Price Index (CPI) inflation data on Thursday will also be a critical indicator of the market's direction. These events make the short-term outlook uncertain for the gold market, but the long-term trend remains bullish.

Final words

In conclusion, the long-term outlook for the gold market remains strongly bullish based on historical patterns such as the bullish pennant and the cup and handle formation. This bullish formation indicates a bullish move in the long term. The quarterly candle for Q2 2024 suggests that this bullish trend is likely to persist into Q3 2024. In the short term, gold prices will be influenced by potential interest rate cuts by the US Federal Reserve, geopolitical tensions in the Middle East, and other market factors, although the decision by the People’s Bank of China to halt gold purchases may temporarily exert downward pressure. Despite these short-term uncertainties, the overall long-term trend for gold is positive, and any price corrections should be seen as buying opportunities.

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