Gold meets the mother of all supports and uses her wisely

There is one forsaken instrument on the market, and it could be this week’s winner, especially over the last two days. That instrument is gold.

Gold has had a real rollercoaster ride this year. From long-term highs, above the 2000 USD/oz, to yearly lows, on 1680 USD/oz, in just a few months.

The reason gold can shine again is that we finally see some demand here. On the chart you have weekly candles, and where we’re about to see the first bullish week since the beginning of June. That is something, especially since the bounce isn’t happening in some random place. No, XAUUSD is bouncing off 1680 USD/oz (green) an absolutely crucial horizontal support which has been helping lift the price since the middle of 2020. Also, the way the price bounces in and of itself isn’t random. Gold’s created a candle with a long tail and a bullish body on top – a hammer!

Taking all that into consideration, our view on gold is positive, and for the first time in weeks. Previously, we were strongly bearish, mostly because of this yellow pattern, the head and shoulders (H&S) formation. However, as it meets and bounces off the 1680 USD/oz support, the influence of the H&S pattern fades away. Our view cancels should the price break the green support, but chances for that happening are now limited.