Gold May Drop Nearly $1835/$1800, Before It Pull Back to $1900+
The price of gold is about to enter a much deeper consolidation, where gold prices may continue lower until they reach support from previous levels of the $1830/$1800 price zone.
The market behavior comes when bulls cannot go any higher due to lack of demand. Selling pressure also comes into play that makes them pause before re-engaging with buyers again.
The daily chart shows the market stuck in a triangle and gold price holding nearly descending resistance areas.
As long as gold price holds below the $1876 price zone, it means there will be no rallies up onto new highs without major catalysts causing panic sellers once more.
Technically, it is clear that gold is stuck in a triangle, and gold price holds nearly a resistance area. So, it is expected that the gold price may correct the downside, And that is happening.
There are fundamental reasons too. The hawkish Fed expectations and a stronger US dollar keep the gold market in check. The Fed funds futures indicate an eventual rate hike by July 2022, with high chances for another one by November.
According to Governor Christopher Waller's comments, the US central bank should speed up tapering if they want more leeway when it comes time to tighten policy again.
The prospects of early tightening continue acting as tailwinds on Treasury bond yields which could provide support at lower prices ahead.
So, if the gold price drops for the technical perception, gold may not fall below the $1830 price zone. Instead, gold may go up again to the $1865/1870 price zone again.
On the other hand, gold is dropping for both fundamental and technical both. As a result, gold has a high chance to drop nearly the $1800 price zone.
We also should keep in mind that from December to February, most of the time, gold prices always rise for many reasons. We can discuss this fact in another article. So, if we find gold nearly at the $1800 price zone just keeping 300 pips stop loss, I think we may get 1000/1200 pips.
The market behavior comes when bulls cannot go any higher due to lack of demand. Selling pressure also comes into play that makes them pause before re-engaging with buyers again.
The daily chart shows the market stuck in a triangle and gold price holding nearly descending resistance areas.
As long as gold price holds below the $1876 price zone, it means there will be no rallies up onto new highs without major catalysts causing panic sellers once more.
Technically, it is clear that gold is stuck in a triangle, and gold price holds nearly a resistance area. So, it is expected that the gold price may correct the downside, And that is happening.
There are fundamental reasons too. The hawkish Fed expectations and a stronger US dollar keep the gold market in check. The Fed funds futures indicate an eventual rate hike by July 2022, with high chances for another one by November.
According to Governor Christopher Waller's comments, the US central bank should speed up tapering if they want more leeway when it comes time to tighten policy again.
The prospects of early tightening continue acting as tailwinds on Treasury bond yields which could provide support at lower prices ahead.
So, if the gold price drops for the technical perception, gold may not fall below the $1830 price zone. Instead, gold may go up again to the $1865/1870 price zone again.
On the other hand, gold is dropping for both fundamental and technical both. As a result, gold has a high chance to drop nearly the $1800 price zone.
We also should keep in mind that from December to February, most of the time, gold prices always rise for many reasons. We can discuss this fact in another article. So, if we find gold nearly at the $1800 price zone just keeping 300 pips stop loss, I think we may get 1000/1200 pips.
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