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Gold continues to pull back after the recent comments from the Fed rate hike prompted a move back in the US dollar currency broadly and also debt ceiling concerns are helping the buck.
The yellow metal has started to weaken as traders await more debt ceiling news and also the recent rise in US import prices has given rise to the notion that inflation may remain sticky.
On the positive side bank loans are expected to decline in the economy is expected to slow in the second half of the year which should also be a headwind toward lower inflation.
Also, with the ongoing bank failures we could see gold supported by more banks going under and also the notion that the Fed may keep bailing out the banks helping the likes of gold and Bitcoin.
Technically, the price of gold has been hugging the $2,000 level. In fact, it is very visible that gold has in fact struggled to move under $2,000, which is a really positive sign for gold bugs.
Going forward, it’s imperative that gold price move back above $2,000, or else we could see a steep drop back to the $1,960 support zone in the coming days and weeks.
Current sentiment metric towards gold shows that hints that this current price action is probably bearish, but a stepper correction may not happen as the sentiment bias is not that severe.
The ActivTrader market sentiment tool shows that just 49 percent of traders are bullish towards gold. Going forward, we really need to see a much strong negative bias by retail to help the chances of a sustained rally.
Gold short-term Technical Analysis
According to technical analysis gold the price of gold has moved not below its 200-period moving average, meaning that the short-term price trend remains very bullish above the $2,000 level.
It is also noteworthy that gold has invalidated a head and shoulders pattern and still has tremendous scope to move into a much higher trading range in future.
Gold Medium-term Technical Analysis
The daily chart shows that the yellow metal holds above the $2,000 level and this can prevent a move towards $1,960. Below $1,960 there is no support until $1,920.
We could see the price of gold making new highs after invalidating the head and shoulders pattern as depicted in the chart below. Gold could explode above the $2,070 level and then the $2,100 level with relative ease.
