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Gold: A Breakout Is Coming

By MarketPulse (Craig Erlam)CommoditiesOct 27, 2021 12:26AM ET
www.investing.com/analysis/gold-a-breakout-is-coming-200606441
Gold: A Breakout Is Coming
By MarketPulse (Craig Erlam)   |  Oct 27, 2021 12:26AM ET
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Can the recovery continue?

Gold has recovered strongly in recent weeks but it’s struggled for momentum since breaking above $1,800.

The yellow metal initially broke above here on Friday but failed to hold and gave back most of its gains to end the week below that important resistance level. This is a sign of weakness in the rally and suggested it may struggle when trading resumed this week.

XAU/USD Daily & 4-Hr Chart
XAU/USD Daily & 4-Hr Chart

While trading on Monday may have given the impression this was just a blip, as gold ended the day above $1,800, but as we’ve seen since, those vulnerabilities remain as it once again plunged back below that level.

This leaves gold in a very strange position. It’s clearly still got plenty of support as it continues to try to push above the $1,800 handle but it’s having a hard time holding on and continues to be forced back. Something has to give.

At times yesterday, it looked as though there may be a key support level around $1,780, which would have resulted in a bearish engulfing pattern on the daily chart and a break of the rising trendline formed during its recovery in recent weeks. But that support held and the price rebounded back. Now once again it's back below the $1,800 level.

Given such a tight range and one that’s becoming smaller by the day, one of these must soon fall, at which point we may have a much clearer view on the direction of travel for gold.

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Gold: A Breakout Is Coming
 

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Gold: A Breakout Is Coming

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Comments (5)
Val Mirov
Val Mirov Oct 29, 2021 10:55AM ET
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Exactly what has happened on Friday @ Vijay. Are we headed for another 5 years of a bear market? Where is the bottom?
Vijay Vishwanathan
Vijay Vishwanathan Oct 27, 2021 1:55AM ET
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Gold will hold up slightly but will be bearish by the second half of the day..
emad hijazi
emad hijazi Oct 27, 2021 1:55AM ET
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why ?
Val Mirov
Val Mirov Oct 27, 2021 1:37AM ET
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Where do you see a bearish engulfing pattern, whatever that means…
Chris Johnson
Chris Johnson Oct 27, 2021 1:29AM ET
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It might go up or down... Or even stay unchanged
Aashish Sapkota
Aashish Sapkota Oct 27, 2021 1:07AM ET
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ok got it . Now tell me will it goes up or down ?
Val Mirov
Val Mirov Oct 27, 2021 1:07AM ET
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Aashish, consult your mule, he may write a better analysis
emad hijazi
emad hijazi Oct 27, 2021 1:07AM ET
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I would say down. keep an eye on dollar
 
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