The bulls have been huffing and puffing over the last three weeks but they haven’t blown open the door for a stronger technical breakout yet. Gold price action has been consolidating in a bit of a range recently and the next trade is to arguably go with the break that comes.
Gold (XAU/USD) daily chart
I’ll continue to point out that there is a certain discomfort in the rise in gold prices this year. That being it is rather one-sided with little to no pullbacks. There have been consolidation phases like the one now and also from April through to June. However, there hasn’t been any meaningful correction to the surging run in 2024.
And that irks me a little even as a gold bull at heart. A healthy correction to the jump higher looks to be overdue but even then, it is going to be but a dip buying opportunity when it comes. At this stage, that’s the only warning signal I can attribute to gold on the charts.
The Factors at Play
But at the same time, it’s no surprise to see gold staying more bullish considering all the factors in play. China may have said that they have halted gold purchases for now. However, it is China we’re talking about here. So, I do hold my reservations on their actual motives and transparency.
Looking Ahead
Otherwise, the structural view continues to stay intact for gold as we look towards the Fed kicking off their rate cut cycle next week. It will be interesting to see how this gold run plays out as we move closer towards the seasonal buying rush in December and January. If the run stretches on, it might complicate the seasonal outlook when the time comes.
Adding insight:
It’s essential to consider geopolitical tensions, inflation expectations, and the performance of other assets like equities when evaluating the trajectory of gold prices. These factors can influence investor sentiment and impact the demand for safe-haven assets like gold. Additionally, monitoring central bank policies and economic data releases can provide insights into potential movements in the gold market.
