Gold Price Forecasts: Gold Threatens Nightly Elections

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Gold Price Forecast:

  • Gold prices are testing the resistance of the trendline, threatening to break through a falling wedge pattern that has been building for most of the past four months.
  • Strong resistance loomed between 1900 and 1920, can buyers finally leave it behind?
  • While a lot of attention is focused on the US election, the rest of the week brings a lot of potential for volatility with Thursday’s FOMC rate decision and Friday’s NFP.
  • The analysis contained in article based on Price action and graphic training. To learn more about price action or chart patterns, check out our DailyFX Education section.

Nearly four months ago now, gold prices had peaked, which might be hard to believe given how strong this move had become. Although bears were difficult to find in early August, the backdrop has changed in the nearly four months since, as gold prices have continued to curl in a trend. down after reaching this new all-time high.

As looked then, Friday August 7e closed with gold prices showing a bearish engulfing pattern. And, at the time, it just seemed like it might prejudge a quick pullback before continuing higher; but that’s not what ended up playing out as we now move into four months of digestion of gold prices after this exuberant uptrend has led through most of the summer.

Daily Gold Price Table

Graphic prepared by James Stanley; Or sur Tradingview

As has been noted on several occasions, the last few months of digestion in gold prices have taken on the tone of a falling wedge formation. Such formations will often be approached for the purpose of bullish breakthroughs and will often appear around a key support area.

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What makes it even more interesting is the fact that this falling wedge takes on similar tones to a bullish flag formation, in which an orderly case of digestion appears after a strong bullish move. These backgrounds will often be discussed with the aim of a bullish pursuit, giving another possible motivator to follow above gold and more specifically to follow the potential for a bullish breakout here.

To learn more about drop wedges or bull flags, check out our DailyFX Education section.

Four hour gold price chart

Four Hour Gold Price Chart

Graphic prepared by James Stanley; Or sur Tradingview

Calendar is chaos – Plan for it

The presidential election tonight promises to be quite thoughtful, but no surprise there. The bigger issue is whether we actually find out the winner tonight, or if we’re looking at an extended vote count or court cases: all possible outliers that unfortunately cannot be ruled out. But, even beyond the election, this week’s economic calendar is busy and there are a number of other factors that can push the prices of both the US dollar and gold.

Markets, in general, hate uncertainty, which could work in favor of the bulls given the economic calendar over the next few days.

On the resistance side, above the 1920 marker that once set the all-time high, the 1933 level remains interesting, after which 1943, 1960 and 1979 become interesting. If gold prices move above all of these prices, the next big point on the chart is the psychic level of 2k.

Under price action – 1900 stays close and below that the same area that caught the lows last week comes into play, from 1859 to 1873.

– Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX



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