|

Gold Price Analysis: Trapped in descending triangle amid risk-off

  • Gold is being squeezed in a triangle pattern amid recession fears and risk aversion. 
  • A breakout would put the bulls in a commanding position, yielding notable recovery rally. 

Gold is struggling to shine amid fresh risk-off in the markets with prices trapped in a descending triangle pattern on the 4-hour chart. 

So far, the top end of the triangle, currently at $1,508, has proved a tough nut to crack. A breakout would imply an end of the sell-off from recent highs above $1,700 and could yield a rally to $1,550.

Alternatively, a triangle breakdown would suggest a continuation of the sell-off from $1,700 and expose support located at $1,445 (November low). 

At press time, the yellow metal is changing hands at $1,496 per Oz, representing a 0.11% drop on the day, even though the futures tied to the S&P 500 index are down 5%. 

"An economic tsunami has been unleashed. A consensus appears to be emerging among economists of the largest contraction in global GDP in a generation," according to Marc Chandler, Chief Market Strategist, Managing Partner, Bannockburn Global Forex.

Even so, gold is down 5.6% on a month-to-date basis, possibly due to the global dash for the US dollar. The greenback has become a preferred safe haven and the dollar index has gained over 4% so far this month. 

4-hour chart

Trend: Bullish above $1,508

Technical levels

XAU/USD

Overview
Today last price1495.74
Today Daily Change-3.32
Today Daily Change %-0.22
Today daily open1499.06
 
Trends
Daily SMA201596.02
Daily SMA501582.85
Daily SMA1001535.3
Daily SMA2001503.19
 
Levels
Previous Daily High1516.19
Previous Daily Low1455.54
Previous Weekly High1561
Previous Weekly Low1451.3
Previous Monthly High1689.4
Previous Monthly Low1547.56
Daily Fibonacci 38.2%1493.02
Daily Fibonacci 61.8%1478.71
Daily Pivot Point S11464.34
Daily Pivot Point S21429.61
Daily Pivot Point S31403.69
Daily Pivot Point R11524.99
Daily Pivot Point R21550.91
Daily Pivot Point R31585.64

Author

Omkar Godbole

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

More from Omkar Godbole
Share:

Editor's Picks

GBP/USD surrenders some gains, back to 1.3420

GBP/USD holds on to moderate gains above 1.3400 the figure on Friday. Optimism surrounding the UK government’s leadership transition and expectations of further BoE tightening support the British Pound, while easing tensions in the Middle East and fading Fed rate-hike expectations weigh on the US Dollar.

EUR/USD turns positive, targets 1.1450

EUR/USD now picks up pace and advances toward the 1.1440 region on Friday, up modestly for the day. With no major economic data due, lingering uncertainty over the US-Iran conflict keeps investors cautious, limiting the pair's upside.

Gold remains offered, still below $4,100

Gold struggles to extend Thursday’s rebound and navigates below the $4,100 mark per troy ounce on Friday. Uncertainty surrounding the Middle East conflict limits the precious metal’s upside, which is also under pressure amid rising US Treasury yields across the curve.

Week ahead – US CPI and Warsh testimony to take centre stage, BoC eyed too

US inflation report and Warsh testimony to headline the week. Dollar to dominate amid slew of other US data and Mideast tensions. Amid fresh Iran escalation, China GDP to shed light on Q2 impact. Bank of Canada not expected to follow RBNZ with rate hike.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June Federal Open Market Committee meeting landed mid-round-trip, describing a world that had already stopped existing.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.