- Bearish target of $1,622 has been hit.
- Gold consolidating within a tight zone.
- Fundamentals playing a big role in the Gold price.
Bears Target Hit
In the October 28th article, we mentioned the potential for Gold to drop to the support zone at $1,622. As we suspected, the gold price has done just that and bounced off that level. Gold has been consolidating between $1,621 & $1,680 now since September 28th. So the question is whether the chances are higher for a break and which way it may break, or if it will continue to consolidate for the foreseeable future.
Considering the above question regarding whether Gold with remain in the consolidation range or we will see a move higher or lower, we must first look at the fundamentals that will affect either case. The Dollar continues to strengthen, and it’s challenging to be bullish on Gold when this is happening.
Gold is currently trading in the upper zone, which is also the top of the neckline we analyzed on October 28th. Keeping the Dollar’s fundamentals in mind, we see two potential outcomes. Gold prices could drop toward the lower zone and test the levels at $1,622.4. If we see weakness in the US Dollar, supporting the Gold price, a break to the upside could send Gold to $1,725.
The fundamentals are playing a huge role in the price dynamic of Gold now, which is why traders should be cautious against going in the opposite direction of the Fed. At this point, the confusion is palpable as Gold remains within the tight consolidation zone. The price is coiling up like a spring at the moment, so if a break does occur – whether it’s to the upside or downside, it will likely be very volatile.