Gold Price Forecast: Gold Breaks Down to Key Support - CPI on Deck

[MongiIG]

GOLD TALKING POINTS:

• Gold prices have pushed down to key support at 10-month lows.
• USD strength, as driven by inflation has been a strong theme of late and that’s helping to drive the move in Gold – this week brings a CPI print out of the US on Wednesday and this could produce some additional drive in that move in Gold.
• The big question is what happens at $1673 which is the current two-year-low in Gold and a price that’s held support through a couple of different iterations. A break-below that represents a further ‘pricing out’ of the same theme that propelled the breakout in the summer of 2020.

 

Gold prices are on their backfoot and for the past four weeks, buyers haven’t been able to produce much to stand in the way of the downtrend. Prices found resistance at a key Fibonacci level in early-June, producing a rising wedge formation along the way. Rising wedges will often be approached with the aim of bearish reversals and that’s continued to play out as sellers have pushed prices all the way down to fresh 10-month-lows.

Current support has a bit of relevancy to that prior resistance, as well, as it was the 50% marker of the 2020-2021 move that helped to set that marker early last month, and the 14.4% retracement from that same study is coming into play this morning to try to help hold the low.

I had written about this setup in early-June just after the rising wedge was confirmed and a few days before the breakdown began.

GOLD DAILY PRICE CHART

Chart prepared by James Stanley; Gold on Tradingview

 

Jul 11, 2022 | DailyFX
James Stanley, Senior Strategist