Gold hasn’t been real easy to get a feel for during the past 18 months. While there have been tradable short-term swings, you couldn’t extrapolate much out of those swings about the future direction due to shifty momentum conditions.
It’s possible a larger ascending wedge pattern could be developing on the weekly time-frame, and if it is to take to a truer form then it could take a while longer before it fully develops. Another down-swing from here towards big support at 1675 may be in the cards early in the year.
From a risk/reward perspective a drop to major support could offer would-be longs an opportunity to scoop up gold with a line-in-the-sand to lean on. Hold onto support and the outlook is neutral to bullish, break the line then the bias will likely need to be adjusted towards even further downside.
On the top-side to get things headed in a positive direction, gold must first climb above 1817 then 1916. At that juncture, it would appear a rally back to the record highs at 2075, or better, is underway.
All-in-all, gold has become increasingly less interesting since peaking out in the middle of 2020, and on that it looks likely that this is an unsustainable lack of trend and we will see a large move develop in 2022. It just might take a bit more directionless trading first on the weekly chart before we get there.
Gold Weekly Chart
Written by Paul Robinson, Strategist