Gold Price Outlook: Consolidation Sets XAU Up to Rally
Gold Price Highlights:
- Gold consolidating nicely amidst a general uptrend
- Breakout could happen in the not-too-distance future
Gold consolidating nicely amidst a general uptrend
Gold hasn’t been doing much lately outside of swinging up and down $50-70, but this is broadly viewed as a good thing as it continues to build a base within the context of a longer-term uptrend. The consolidation pattern developing over the past two months is set to give-way any time.
A breakout beyond 1765 could quickly have three peaks in play that were created in the wake of the 2011 bull market high. All three peaks arrive around the 1800 level. With the consolidation pattern happening so closely to this key area, there may be enough power to push on through.
But before getting ahead of ourselves, we need to first handle the current situation. While a breakout looks probable, there is still risk that we see another swing back towards the lower end of the range in the ~1680/60 area.
If we see weakness to the bottom of the range it could provide traders with an opportunity to scoop up gold with solid risk/reward. As long as the bottom of the range holds, so does the current bullish outlook. Should gold break 1658, it doesn’t mean the trend has changed necessarily, but we will need to take a more cautious stance until it firms up again.
Gold Daily Chart (consolidating nicely)
Gold Chart by TradingView
Gold Weekly Chart (2011/12 resistance)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.