GOLD PRICE – CREEPS TOWARDS $1,800
On Wednesday, Gold took off to an over seven and a half-year high at $1,779 then retreated as some bulls seemed to cut back nonetheless, the weekly candlestick closed on Friday in the green with a 1.6% gain.Caution over rapid rises in U.S. coronavirus cases cast doubt over the reopening of the economy and kept demand for the safe-havens intact. Therefore, investors continued to adjust between the economic stimulus measures with the uncertainty coming from the rising levels of coronavirus cases in the US and elsewhere.
Last month, the price paused its upward trend then traded in a continuation pattern (bullish rectangle). Last week, the price broke above the upper line of the rectangle located at $1,747, and rebounded twice from this level indicating that bulls had the upper hand.
Thus, Gold could be on its way towards the high end of the current trading zone $1,752 – $1,796. Any further close above this level means a stronger bullish sentiment and may extend the rally towards $1,859.
In turn, a close below $1,747 would invalidate the bullish rectangle pattern and reflect a weaker bullish sentiment. That could send the price towards $1,685 and any further close below this level could press XAU/USD even lower towards $1,635.
On Friday, XAU/USD rebounded from the uptrend line originated from the June 15 low at $1,704 indicating that bullish bias was still in place. Today, the price reversed lower eyeing a test of the aforementioned uptrend line.
Hence, any violation of this line increases the likelihood of creating a reversal pattern (double top). A further break below the neckline of the double top pattern located at $1,747 would be considered a bearish signal.
To conclude, a break above the $1,780 handle would negate the double top pattern and may resume bullish price action towards the high end of the trading zone discussed above on the daily chart. On the other hand, any break below $1,744 could send Gold towards $1,721. Nonetheless, the weekly resistance and support levels marked on the four-hour chart should be watched be kept in focus.
