Gold Daily Chart breakdown 22/10/20
• Last weeks gain +0.16%
• Last months decline -3.51% – Current Month +0.80%
• This years performance +15.85%
The last three months have seen a bit of everything for Gold; bulls kicked it off with strong rallies, this changed last month after sellers returned cutting things back. US-China trade and its influence on equities combined with the Federal Reserves stance on rates have been the main forces guiding Gold this year. Overall the yellow metal has had a great year adding over 15% at this point.
US rates and Gold – Federal fund futures show that traders see an 87% chance for a 25 basis-point rate cut by the U.S. central bank in its month-end monetary policy meeting. “Ultimately the main driver in gold is the U.S. Fed and what they’re doing with the (interest) rates,” Bob Haberkorn, senior market strategist at RJO Futures said. Hedge funds and money managers were seen to have cut their bullish positions in COMEX gold and silver contracts in the week to Oct. 15; data showed last Friday.
Looking at the daily Gold chart, we can see a few things are happening in price at the moment, sellers continue to hold price a bearish downward channel, but this is inside a continuing longer-term uptrend. On the short-term a new consolidation has appeared inside the current consolidation (bearish channel). Price has formed a wedge which can produce either bullish or bearish direction. Traders will need to wait for a breakout to see true direction.
With with the overall uptrend remaining and that bear channels in uptrends can be seen as consolidation, odds are that a new upswing could develop. If price falls and breaks lower we would continue to look for buyers to re-engage from the 38.2 and 50% Fib points that remain below. Both these points continue to show a healthy trend if a correction stops at this level according to Fibonacci followers.
Unless we see some very strong selling that sends price below the 50% fib point and or support two, we will continue to look for the overall uptrend to remain in play.