Gold Price Forecast: Ranging within Triangle, For Now


Gold Price Outlook:

  • Gold prices continue to trade within a multi-week symmetric triangle of April.
  • Fundamental shocks remain – rising U.S. real yields – and are unlikely to decline any time soon.
  • According to the IG Customer Sense Indexgold prices hold a mixed bias soon.

More Side Trading

Gold prices have made little progress in recent days, maintaining a high after setting their monthly lows last week around 1805. Admittedly, gold prices have not progressed much for the better part of the past month, continuing within the symmetrical triangle. cut out since the end of April.

The outlook for a significant higher move of gold prices remains limited at best. U.S. real yields – nominal Treasury yields lower inflation expectations – continue to push higher, frightening headwind. So it is with the fact that “some short-term rallies of gold prices keep the ‘sell the rally’ mindset, especially as gold prices have no bullish seasonal trend in June. ”

Gold Volatility Continues Decline

Historically, gold prices have a relationship with volatility unlike other asset classes. While other asset classes like bonds and stocks don’t like increased volatility – signaling greater uncertainty around cash flows, dividends, coupon payments, and so on. – gold tends to profit during periods of higher volatility. The continued fall in gold volatility over the past week bodes ill for the immediate prospects of a gold price.

GVZ (Gold Volatility) Technical Analysis: Daily Price Chart (June 2021 to June 2022) (Chart 1)

Gold Price Forecast: Within Triangle, Currently - Levels for XAU / USD

Gold volatility (as measured by Cboe’s gold volatility ETF, GVZ, which tracks the 1-month implied volatility of gold as a derivative of the GLD option chain) traded at 20.25 at the time this report was written. The 5-day correlation between GVZ and gold prices is +0.22 while the 20-day correlation is -0.59. A week ago, no more June 15 the 5-day correlation was —0.79 and the 20-day correlation was -0.65.

Technical Analysis of Gold Price: Daily Diagram (June 2021 to June 2022) (Diagram 2)

Gold Price Forecast: Within Triangle, Currently - Levels for XAU / USD

Gold prices continue to remain around the 23.6% Fibonacci retracement of the 2015 low / 2020 high range at 1832.48. Context matters: price action continues below the uptrend of the lows of August 2021, December 2021 and January 2022; and the triangle formed after a decrease in the annual highs.

Moment begins to take a bearish hue. Gold prices are intertwined between their daily EMA envelope, which is still lined up in a bearish consecutive order. Every day the rise of MACD below its signal line began to fail, while daily Slow Stocks began to decline. Another lower move may soon hit, although the triangle dictates that it is possible a firm consolidation will last for a few more weeks.

Gold Price Technical Analysis: Weekly Chart (October 2015 to June 2022) (Chart 3)

Gold Price Forecast: Within Triangle, Currently - Levels for XAU / USD

Nothing has changed in the long run. “The weekly time frame continues to suggest that a double top is formed for a goald prices, with the two ends cut out before the highs of August 2020 and March 2022. Always since the bassist outside swallowing bar on the weekly time frame at the end of April, gold prices could not sustain a significant supply.A drop below the June minimum of 1805.21 would increase the likelihood of continued movement below 1800 over the coming months.


Gold Price Forecast: Within Triangle, Currently - Levels for XAU / USD

Gold: Retail data show that 80.56% of retailers are net-long with the ratio of long to short retailers at 4.14 to 1. The number of retailers net-long is 3.55% lower than yesterday and 5.22% lower than last week, while the number of net-short traders is 5.98% lower than yesterday and 11.85% higher than last week.

We usually take the opposite view of crowd sentiment, and the fact that traders are net-long suggests that gold prices will continue to fall.

Positioning is longer online than yesterday but shorter online than last week. The combination of current sentiment and recent changes gives us an additional mixed Gold trading bias.

— Written by Christopher Vecchio, CFA, Chief Strategist



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