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Gold Price Flag Suggests Big Rally May Start Soon

By Chris VermeulenCommoditiesOct 15, 2021 09:55AM ET
www.investing.com/analysis/gold-price-flag-suggests-big-rally-may-start-soon-200605216
Gold Price Flag Suggests Big Rally May Start Soon
By Chris Vermeulen   |  Oct 15, 2021 09:55AM ET
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As precious metals traders have waited out this extended sideways/downward price contraction in price over the past 14+ months, a very broad pennant/flag price formation is nearing an apex level that suggests gold may begin a new rally phase over the next 60+ days. Support near $1,675 is a critical price level that has been tested three times over the past eight months. The true apex of the pennant/flag price formation will be reached near Nov. 15, 2021 – nearly 30 days before the U.S. debt ceiling issue will become another big issue in Washington.

Gold Price Flag Initiated After $1,675 Level Based In March 2021

Let's start with this gold daily chart. I've drawn an upper line from the peak price level, in August 2020, across the recent highs in June 2021. Additionally, I've drawn a lower line from the lows near September 2020 across a series of price levels that are acting as support. These two major price channels have converged into a pennant/flag type of price formation recently.

The unique price lows near March 2021 first identified the $1,675 price support level. I believe the downward price trend from August 2020 to these lows in March 2021 represented a downward price wave/phase for gold. I also believe the recent upward price rally, after the March 2021 lows, and subsequent retesting of the $1,675 level while the pennant/flag price pattern setup reflects a sideways price flag that is currently nearing the apex level.

The apex level of these types of price flags typically suggests a potentially explosive price trend will initiate – possibly equal to the range of the price flag range – in this case, more than $250. The current price flag apex level in gold is near $1,800. A rally of $250 or more from this level would push gold up to levels near $2,100 or higher if my research is correct.

Gold Daily Chart.
Gold Daily Chart.

$1,675 Must Hold In Order To Prompt A Bigger Price Rally In Gold

As the current pennant/flag price formation in gold nears the apex level, it is important to understand that increase price volatility will happen and there is a possibility that another downside price rotation, possibly nearing $1,675 again, could take place. It is important that the $1,675 level continues to hold and act as support if this happens. If the $1,675 level is breached, then the critical support level for gold has been broken – which may suggest a deeper downside price move is possible.

In my opinion, I believe gold will attempt to settle between $1,700 and $1,860 over the next 4+ weeks as we move closer to Nov. 15, true apex date. The closer we get to that date, the more likely we are going to see increased price volatility in Gold, and a potential for a breakout price trend.

The pennant/flag formation, which I've drawn in magenta on the weekly gold chart below, has already completed four of the five total price waves. The 5th wave, in this structure, appears to be a bullish price breakout wave. This, along with what I believe will likely be an increased overall caution in the markets throughout Q4:2021 and into early 2022, will push gold higher as traders move to hedge risks.

Gold Weekly Chart.
Gold Weekly Chart.

I wrote about the broader market trends and price patterns in May 2021. At that time I suggested a momentum base appeared to be setting up which could confirm the larger appreciation/depreciation market cycles. This research article was created before the current pennant/flag price formation started to form. Overall, the momentum base level in gold is still valid and the new pennant/flag pattern suggests we are nearing a big breakout/breakdown trend in precious metals.

Over the next 12 to 24+ months, I expect very large price swings in the U.S. stock market and other asset classes across the globe. I believe the markets are starting to transition away from the continued central bank support rally phase and may start a revaluation phase as global traders attempt to identify the next big trends. Precious metals will likely start to act as a proper hedge as caution and concern start to drive traders/investors into metals.

Gold Price Flag Suggests Big Rally May Start Soon
 

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Gold Price Flag Suggests Big Rally May Start Soon

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Comments (15)
Colonel Forbin
Colonel Forbin Oct 18, 2021 5:43PM ET
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That dirty uranium is doing great . Gold is a short and you know it
Fruhan Griffon
Fruhan Oct 16, 2021 9:12PM ET
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Bitcoin has punished this ancient asset. It's days are done as a store of wealth. Buy BTC and forget about this dog.
Edward Chong
Edward Chong Oct 16, 2021 9:12PM ET
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oh this kitty bitcoin can be use in industrial and commercial? this is something new.
Mehmet Dutlu
Mehmet Dutlu Oct 16, 2021 9:12PM ET
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bitcoin is "poison rat squared".
King Tolba
King Tolba Oct 16, 2021 3:04PM ET
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Very good and logical analysis
Peter BullMarket
Peter BullMarket Oct 16, 2021 1:55PM ET
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Everything suggest a gold bull run, inflation, negative real rates, money supply, China crackdown, overvalued stock market etc, but the price of gold doesnt move
Mehmet Dutlu
Mehmet Dutlu Oct 16, 2021 1:51PM ET
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With USDs bullish technical indicators and also with yields being in uptrend, you cannot expect a rally in precious metals.
BR BR
BR BR Oct 16, 2021 1:45PM ET
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may be just like most traders you should write and trade "opposite" of your "belief" for profitable trades. Lotta "ifs" can be applied in both direction.
Val Mirov
Val Mirov Oct 16, 2021 6:38AM ET
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Soon = 2049
Dog Keeper
Dog Keeper Oct 16, 2021 5:15AM ET
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Still waiting for silver rising to 50 - 100 as predicted earlier.
Val Mirov
Val Mirov Oct 16, 2021 5:15AM ET
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Just a couple more decades, not to worry
Paul IllTradeThese
Paul IllTradeThese Oct 16, 2021 4:33AM ET
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i agree with Ri Wa. unfortunately gotta get burned a few times to learn whos got the good info and who doesnt. Chris Vermeulen continuously misses with his projections.
Edward Chong
Edward Chong Oct 16, 2021 4:33AM ET
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never do a trade based on analysis.
Ri Wa
Ri Wa Oct 16, 2021 2:59AM ET
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be carefull with this adviser. He is wrong too often.
Rameez Ali
Rameez Ali Oct 16, 2021 1:41AM ET
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u did not mention tapering
Roberta Garrett
Roberta Garrett Oct 15, 2021 6:08PM ET
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This author also thought this spring silver would be $39.
Mehmet Dutlu
Mehmet Dutlu Oct 15, 2021 6:08PM ET
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Well, he is sometimes right. He predicted silver to skyrocket when it was 17 $ before summer 2020 and it soared to 30$.
Mr Mawi
Mr Mawi Oct 15, 2021 1:13PM ET
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What do you think about the following article in FX Empire Beware, Gold Bulls — That’s the Beginning of the EndBy:Przemysław RadomskiPublished: Oct 15, 2021, 13:53 GMT+4
Roberta Garrett
Roberta Garrett Oct 15, 2021 1:13PM ET
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Thanks for posting this. I went and read what you cited because I had missed it.
Mehmet Dutlu
Mehmet Dutlu Oct 15, 2021 1:13PM ET
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Radomski is a true gold bear, but his predictions make sense. He predicted US dollar rally in January 2021.
Foot ball League
Foot ball League Oct 15, 2021 11:55AM ET
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Nice explain dear
Filippo Bulgarini d Elci
Filippo Bulgarini d Elci Oct 15, 2021 11:21AM ET
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Nice article! I see Gold hitting 2k before eoy...
 
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