After reaching an all-time high of 2090.49 on December 4 of last year, Gold is consolidating in a symmetrical triangle pattern, looking for direction amid increasing global geopolitical tensions, the strengthening of the US Dollar, and the upcoming release of the consumer inflation figures.
Overview
After reaching an all-time high of 2090.49 on December 4 of last year, Gold is consolidating in a symmetrical triangle pattern, looking for direction amid increasing global geopolitical tensions, the strengthening of the US Dollar, and the upcoming release of the consumer inflation figures.
Upcoming Economic Events
Tuesday 13:30 (GMT): Consumer Price Index (CPI)
Thursday 13:30 (GMT): Retail Sales
Friday 13:30 (GMT): Producer Price Index (PPI)
Friday 15:00 (GMT): Michigan Consumer Sentiment
Technical Analysis
The peak formation on December 4, at 2090.49 US dollars per troy ounce, marked an all-time high for the precious metal, paving the way for further strengthening of the bulls and additional gains.
However, with the formation of the Bearish Engulfing pattern on the same day, the buyers indicated a weakness in maintaining control of the bullish market and pulling the prices higher, which paved the way for a technical correction to the downside.
More particularly, the Average Directional Index is hovering below its 20 level, hinting at a trendless market looking for direction.
A decisive close above the triangle will potentially resume the upward trajectory for Gold, eying further gains.
Conversely, a decisive close below the symmetrical triangle will propel the precious metal to continue in the downward direction.
Both the 50-period Moving Average and the Momentum Oscillator are in agreement with a bearish outlook. More specifically, prices are trading below the Moving Average line, indicating a downward bias where the Momentum Oscillator fell below its 100 baseline, supporting the bearish scenario.
Potential Upside Targets
In the bullish scenario, three potential price targets may be calculated:
2065.39: The first price target is seen at 2065.39, representing the peak formed on February 1.
2090.49: The second target is 2090.49, corresponding to the all-time high established on December 4.
2177.30: The third price target may be calculated by projecting the triangle's height upwards from the potential breakout point.
Potential Downside Targets
2001.83: The first downside target aligns with the trough at 2001.83, formed on January 17.
1973.02: Subsequently, the following line of support is estimated at 1973.02, corresponding to the previous trough formed on December 13.
1910.28: Finally, the third price target may be calculated by projecting downwards from the potential breakout point, the height of the triangle.
Conclusion and Considerations
In conclusion, Gold is "trapped" in a symmetrical triangle pattern following a trendless direction amid the release of important consumer inflation figures. A decisive breakout of the triangle will set the stage for a potential trend in either direction, emphasizing the need for cautious monitoring and risk management in volatile markets. Additionally, staying informed about economic events and geopolitical developments will be essential in making informed trading decisions in the Gold market.