We will take a closer look at the price action to see what we can expect.
J.P. delivered a hawkish speech, warning of higher interest rates. This could lead to at least temporary bearish movements in gold.
The war with Israel is still very active. We have seen gold rally aggressively with the start of this war.
Employment is falling, or more accurately, it is not moving. Last reading of unemployment rate was unchanged. Which gives room for the FED to go further with IR.
The latest CPI showed that inflation is still high, most likely because of oil prices. Although the core CPI showed a significant drop in inflation, it seems to me that this was not enough evidence for the FED.
There are definitely bearish factors with the hawkish stance, but the war is a geopolitical risk, that does not happen very often. In my opinion, this risk will push the “safe haven” metal higher.
Gold is forming a very strong bullish manipulation. If this month closes as such a strong FU, we can be sure that the all-time high will be broken.
Gold has just broken through a strong weekly manipulation area. Most likely, the price will come back for a retracement and continue on its bullish path.
I would say that gold is now in the daily reaction area where it has often ranged in the past. That makes, this week we may see a sideways price action.
Although the price action has been very strong and gold has been strong against other currencies, the benchmark indices are showing underlying weakness. This should give us a clue that we may see sideways price action this week.
Last week the pros were bearish, but it seems they have already sync with the banks.
Yields are rising, but so is gold. It tells us that the big players are probably buying because of the war.
XAUUSD vs GDX
I do not like this divergence. History has shown that we should be cautious when there is such a divergence. BUT last year, during the strong rally in Gold I, such phenomena also happened.
Gold vs Silver
Silver is also very bullish but has failed to break through the highs. These two could form a SMT divergence, suggesting at least a slowdown in the current rally.
I am not sure if this is the right count as the extension is larger than normal, but for now I will focus on the bullish count.
Volume Spread Analysis – Wyckoff patterns
The volume on the recent low was large and did not suggest a reversal. Nevertheless, the war came and the economic events pushed gold higher.
The current price action appears to be an accumulation – a classic Wyckoff pattern.
We saw what happened last time when the price reached the band and became oversold. Right now gold is at the top of the band.
The RSI has entered the overbought zone.
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