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Gold continues to struggle with the $2,000 level, however, dips in the price of gold are still being bought aggressively, meaning that the likelihood of gold eventually breaking through $2,000 are high.
The yellow metal experience a brief dip at the start of the week after OPEC announced that it will cut the overall oil production by around 1.16 million barrels/day (bpd), which will lead to the overall pledge of production cut to 3.66 million bpd.
Gold moved because the move could be inflationary for the global economy, which would mean that the Federal Reserve may need to keep interest rate higher for longer than markets expect.
In a true sign of a bull market gold did not keep down long on the news about OPEC, further underscoring that gold is brewing for a breakout above the $2,000 that may be sustainable.
Gold has been struggling to break above the $2,000 level for a few weeks sometime, and the numerous failures have resulted in a triple top pattern forming on the short-term charts.
This could be setting a trap for sellers. When gold does finally breakthrough the $2,000 level we could see a near parabolic move that turbo charges gold into a much higher price range.
Current sentiment metric towards gold shows that sentiment has become very bearish all of a sudden, which hints that a breakout could happen, further confirming the bear trap theory.
The ActivTrader market sentiment tool shows that 40 percent of traders are bullish towards gold. Going forward, we really need to see the continued strong negative bias by retail to help the chances of a sustained rally to $2,000.
Gold short-term Technical Analysis
According to technical analysis gold the price of gold has been trapped inside a triangle shaped pattern on the four-hour time frame and a major breakout is nearing.
It is also noteworthy that gold would likely target the $2,020 level if a bullish breakout happen. The $1,945 level remains the next possible upside target if a downside move takes place.
Gold Medium-term Technical Analysis
The daily chart shows that the yellow-metal has moved back inside its two-year range and bounced its 200-day moving average, around the $1,780 support area.
We could see the price of gold making new highs if it ignites the cup and handle pattern as depicted in the chart below. Gold could explode above the $2,000 level and then the $2,200 level with relative ease.
