Gold Price Analysis: Bulls break out of reverse hourly head & shoulders to fresh highs of $1870


  • Precious metals have started the week on the front foot
  • The inflation hedge playbook is fully underway.
  • Gold has reached a fresh rally high in a breakout of the reverse head and shoulders. 

Precious metals have started the week on the front foot despite growing fears of renewed stay at home orders in major US cities, most recently being Los Angeles.

As we have witnessed in the past, gold does not hedge against a deflationary shock such as the virus, but so far inflation expectations have managed to hold firm in face of the latest worries,

analysts at TD Securities have argued.

Indeed, with yields sinking lower, real rates continue to make new lows and, along with mass stimulus and liquidity, remain the largest contributors to precious metal strength.

We expect that these common drivers will continue to drive capital to shelter itself from negative real yields in both risk assets and real assets, and therefore, we argue that money managers need not be concerned about trading gold in a risk-on environment.

From a technical perspective, the bulls are breaking away from the neckline of the reverse head and shoulders on the hourly chart:

Bulls can take comfort that the price is through the AUG 2012 resistance turned support:

A retest of the neckline and a stop below structure could have been a set-up for the committed bulls chasing the bid towards all-time highs set back in September 2011 for a 1:3 R/R.

Bulls that missed that train still have a 1:2 at market. 

 

 

 

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.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD pressured toward 1.17 amid higher US yields

EUR/USD is falling toward 1.17 as US bond yields rise amid the US fiscal impasse and ahead of US inflation figures. Coronavirus headlines and eurozone industrial output are also in play.

EUR/USD News

GBP/USD rises toward 1.3050 as UK Q2 GDP falls 20.4%

GBP/USD is rising toward 1.3050 after UK Q2 GDP fell by 20.4%, marginally above expectations. The devastating drop was priced in by markets and US inflation is now eyed.

GBP/USD News

Gold bounces above $1,900 after rapid collapse

Gold is trading above $1,900 recovering from the biggest rout in seven years. Profit-taking and higher US yields weigh on the precious metal. US inflation figures are eyed.

Gold News

Forex Today: Gold sell-off extends, dollar reigns supreme amid fiscal impasse, ahead of data

US bond yields are on the rise, supporting the recovering dollar and contributing to a sell-off in precious metals. The lack of progress in US fiscal talks and the increase in America's coronavirus deaths are among the depressing factors. US CPI is eyed.

Read more

WTI: Big move looks overdue

WTI could soon witness a big move in either direction. That’s because, the spread between Bollinger bands – volatility indicators placed 2 standard deviations above and below the 20-day simple moving average of price - has narrowed ...

Oil News

Forex MAJORS

Cryptocurrencies

Signatures