technical analysis: history will repeat itself. If a specific structure always fluctuates similarly in the future market after it appears, then the specific structure can be used as a trading signal. This specific structure can be obtained through historical data statistics of a single variety, or through cross-validation of multiple varieties, or it can be a summary of some kind of experience (such as wave theory). In the past two years, the international gold price has been replicating the historical trend.
In August 2011, COMEX gold hit a record high of US$1,917, and then began to fluctuate downward. It was supported and rose again after falling to US$1,526 in May 2012. It reached its second-high of $1,790 in September 2012, and then launched a three-year decline. Setting new highs - pullback - rebound to the second high - long-term decline. This model is called double top /retracement confirmation in the field of technical analysis, which is a typical feature of the formation of the top.
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In July 2020, COMEX gold rose to its historical high of US$2005, and then began to fluctuate downward. In March 2021, it hit the support level of US$1,673 and stopped falling and rebounded. Although it broke through 2005 in March this year and hit a record high of 2078 US dollars, it finally closed at 1942 US dollars. The pattern of setting a new high - pullback - rebounding to the second high - long-term decline is significant. Judging from the closing price line chart, the trend from July 2020 to the present perfectly replicates the trend structure from August 2011 to September 2012. According to the theory that "history will repeat itself", gold prices will continue to fall sharply in the next three years.
In addition to the technical signals, the macro side also supports the conclusion that bearish gold is. US stock August core CPI data jumped from 5.9% to 6.3%, declaring the bankruptcy of inflation inflection point. Federal is in a state of radical hikes , and its pace of hikes will not stop as long as the economy shows no signs of recession. USD index has risen above the 110 mark. Although it is in an overbought state, there is not enough negative news to make it fall. International gold prices and the US dollar index are a seesaw relationship, and the latter strengthens and the former will inevitably weaken. In recent months, the frequent breaks of international gold price has fallen below 1700, which is a manifestation of lack of confidence in the bulls.
Due to Fed rate hike , the US dollar index is very likely to rise to the 120 mark before the end of the year. Once a trend is formed, it is difficult to change. In the long term, the starting point of the US dollar index was in March 2008, when the price was 71.80. During this period, after two wide-range oscillation-type pullbacks, a new round of unilateral upward trend will be started after each oscillation is over. Considering that after the outbreak of the epidemic in 2020, global central banks represented by the Federal Reserve adopted an extreme loose monetary policy , it may be reasonable for this round of rise in the US dollar index to hit an extremely high price.
ATFX analyst team has a brief view: Under the strong state of the US dollar index, international gold is difficult to say.
ATFX risk warning and disclaimer: The market is risky, and investment should be cautious. The above content only represents the view of the analyst and does not constitute any operational suggestions.
This article comes from the financial world
