Gold is down another 0.7% today as a firmer dollar and higher yields since the election looks to be weighing. Alternative flows into Trump trades such as Bitcoin and stocks are also arguably in play, with gold not quite favoured as much in that sense. But how are things playing out on the charts?
Gold (XAU/USD) daily chart
The drop today reaffirms some rejection closer to $2,700 again after a brief bounce following the election result last week. The most notable thing is that we are seeing gold hold back below the broken trendline support from August (white line). And that is keeping sellers in control, alongside a push back under both its 100 and 200-hour moving averages:
Gold (XAU/USD) hourly chart
That is keeping the near-term bias more bearish now, keeping with the momentum from the US election result.
So, what’s next for gold?
The daily chart shows that the latest fall is nothing too significant but there are a couple of momentum breaks/shifts as seen above.
For sellers, a push to test the October lows near $2,600 would be the first real test of gathering more downside momentum in this latest run here. And if they manage that, then only I reckon one can argue about a deeper pullback for gold. It is one that I’ve been nagging on for a while that it’s been coming.
And if we do get such a pullback, I reckon it will be a much welcome development for the bulls and dip buyers.
The run higher this year has been nothing short of breathtaking and any pullback in the next few weeks will be rather timely I would say.
It would come right before the typical seasonal buying rush in gold that usually coincides in December and January.
Gold (XAU/USD) monthly performance (% change)
In the last 20 years, January has been the best performing month for gold. Meanwhile, the precious metal is on a 7-year winning streak in December trading. As such, the seasonal consideration is a tough thing to ignore if you’re looking at gold in the next two to three months.
Given that potential, any material pullback in gold prices now might just be setting up for a stronger seasonal tailwind when we get to the months ahead. Keep that in your back pocket just in case.