Gold Consolidates Recent Gains

Sometimes charts are easy to read with basic Technical Analysis and other times they'll trip you up and make an asshole out of you. Fortunately for me I've been seeing the charts reasonably well recently and I've been very happy with the way that Gold in particular has been behaving. About 20 days ago I did pick the top with my post Gold Ripping Faces Off but Now Overbought? and it's pretty rare to get both the timing and the price right but the question I have is (as always) - "What comes next?"

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At the time of my last post (and immediately afterwards) I was saying that I was hoping to see a Consolidation rather than a substantial Pullback. My arbitrary price range for a consolidation was about $3000 to $3500 with a timeframe of about 3-6 months. I still think this is the most likely scenario but we now at least have 20 days of price action where we can have a look to see where Support and Resistance levels might be forming.

It is still very early but we have some touchpoints that we can at least keep an eye on. I'm expecting (hoping) for a Bullish Flag formation which is basically a gradually declining channel that consolidates before going higher again. I've put a couple of lines on the chart that would fit that scenario and we still have some room to move before Gold starts flirting with the $3000 level that I hope to be a strong floor. The channel I've drawn is about $250 USD wide which is about 7% for fluctuation so that might be a bit narrow and if my case holds then it's looking more likely to be closer to 3 months of consolidation rather than 6, but we will soon see.

Of course there is still a lot of noise going on that could affect the gold price. The whole Trump vs Powell narrative on the monetary policy front has died off a bit but not entirely gone away. We've had an India vs Pakistan war threat blow up in the last week or so that could be a bit scary to see nuclear powers firing off, although apparently a ceasefire is now in place and cooler heads may prevail there. In the Ukraine vs Russia theatre there is now a Minerals Deal in place which I personally think increases the chance of prolonged conflict there. That's because the US now has more skin in that game and they won't throw Ukraine under the bus from this point.

It's hard to know just how much the geopolitics / war narratives are affecting the gold price. All I can summarize is that the world is still a bit of a shitshow and that hasn't changed (nor looks likely to change) in the next 3-6 months.