Gold has been in a broad uptrend for a few years now, but particularly for the last 5 months or so it has been moving strongly higher. However, since the US Presidential Election Gold has had a bit of a Break Down. It can be tricky to get the Support and Resistance lines on the upward trend channel right, but I've given it a go in the chart below.
The thicker line for Resistance is fairly clear. There are 3 solid touches on that line so it's an obvious trendline to be aware of. Identifying Support is a little trickier. The thicker line for support is on a slightly longer timeline and has a few touches, while also running through $2600 which many pundits have identified as a Key Level. I tend to think this is the stronger line...
However on a slightly shorter timeframe we can also see (via the thinner line) several touchpoints that also line up with $2700. Based on that support what we've seen is a Rising Wedge Pattern which is commonly identified as a Trend Reversal Pattern...or in other words, it's Bearish for Gold and it did sell off pretty hard when that support line broke.
Either way, BOTH of these potential Trend Support Lines are now broken. So if the medium term uptrend is over the question is - "What now?" Do we see a Correction here or a Consolidation? For me, I am still a long term believer in the Fundamentals for Gold as an alternative to Fiat Currency, however, in the short term those fundamentals have dampened a little.
Last time we saw Trump elected Gold took a bit of a hit and then trended sideways for a couple of years. If peace in Ukraine can be achieved then that's a tailwind for Gold that drops off and if the Federal Reserve stops cutting Interest Rates then that boosts the USD with another tailwind gone. We also have a potential pro-crypto policy shift in the US which may attract more alt-currency investors (like me) away from Gold in the short term.
Long term there are still some big debt issues for the US that I don't see being solved and if push comes to shove the new US administration is likely to print money as hard (if not harder) than the last one so I'm thinking maybe the Gold market cools off for the next 6 or 12 months and has a rest while the new US government has a chance to take shape.
If you're a stacker like me then this next year or so could be a good period to Dollar Cost Average and Buy the Dip. I'm still holding my physical metals, but I've shifted my paper metals into crypto for the short term. Maybe around this time next year I'll shift it back. I will have to wait and see what 2025 looks like...
DISCLAIMER - This is not financial advice
