The end of May and the beginning of June was excellent for the Gold bulls. Everything went smoothly and according to the technical plan. In Alpari, we were signaling the possibility of a significant upswing since the 23rd of May. Apart from the price action factors, there was a bit of luck here. Help came from the fundamental side of the market – from the White House. Markets were shocked by the proposal of new tariffs targeting Mexico. Combination of Mexico, China and Iran gave a clear risk-off mode on the market, so a situation, where Gold was poised for gains.
Technically, rises were supported by the fact that the Au managed to defend the long-term up trendline (orange) and bounced from the 38,2% Fibonacci, which for the past few weeks was crucial support. All that was happening inside of the wedge, which is a trend continuation pattern and was promoting a breakout to the upside. The decisive bullish attack happened on the last day of May and the first trading day of June brought us a continuation of the golden optimism.
Everybody was wondering if buyers will have enough power to beat the tops from February and set new long-term lows. Answer for that question came on Friday and was positive. Monday brings us an agreement with Mexico, so at the same time correction on gold. Correction, which can easily turn into a reversal. Everything is in bullish hands now. If the current drop is meant to be a correction only, we should see a rise anytime soon. Price staying below the recent top for longer will be a definitely negative sign and bulls should avoid this situation at all costs.
