Gold has had a rollercoaster year. From long-term highs, above $2000, to yearly lows, on $1680, in just a few months. The reason gold can shine again is that we see some demand at current levels. 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, XAU/USD is bouncing off $1680 (green), a crucial horizontal support that has been helping lift the price since the middle of 2020. Also, the way the price bounces isn’t random. Gold created a candle with a long tail and a bullish body – a hammer.
Considering all that, our view on gold is positive, and for the first time in weeks. Previously, we were strongly bearish, primarily because of this yellow pattern, the head and shoulders (H&S) formation. However, as it meets and bounces off the $1680 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.
