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August saw gold hit thee objective at $2075/80 and strategists at Credit Suisse are seeing a consolidation phase emerge from here as looked for. The core bias remains to view this as consolidation in the core bull trend, with eventual new highs expected above $2075/80, with resistance then seen at $2300. But, they do not look for a rush back to new highs and we believe investors should be prepared for a lengthy sideways phase. Key support for Gold stays seen at $1887/37.

Key quotes

“Whilst we continue to see the long-term trend higher, reinforced by falling US Real Yields and a falling USD, our immediate bias remains for further consolidation above a cluster of supports at $1887/37, which includes the 23.6% retracement of the entire rally from the 2018 low. Post this consolidation, we look for an eventual move above $2075 with resistance seen next at $2175, then $2300. Whilst we would look for a fresh consolidation at this latter level, a direct break would suggest scope for $2700/20 over the longer-term.”

“Below $1837 though would warn of a more significant but still corrective setback with support seen next at $1765, then $1726.”

“The last time we saw monthly RSI momentum reach the extreme levels we posted this August was in the 2001/2011 bull market which then marked beginning of the two major consolidation phases in this bull market – 2006/2007 and 2008/2009. Subsequent new highs in the bull market were not posed for another 16 and 18-months respectively. Whilst we do not believe the consolidation phase we are seeing now will last this long, we believe investors should still allow for a potentially lengthy pause.”

 

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