Gold’s Weekly Flag Pattern Projects Long-Term Target at $2,900

• Technical Overview: Gold has decisively broken out of its range, setting a new all-time high and signaling the end of its sideways consolidation phase. This breakout suggests a broader uptrend and a potential strong rally in the coming months. Technically, gold has been in an uptrend since the start of the year, with a pause in the trend from mid-April to mid-July. This pause was driven by uncertainty around potential Fed rate cuts, causing a sideways consolidation in prices. Despite potential resistance, the fundamentals strongly support further price discovery.

• Long-Term Flag Pattern: The period from February to April saw an aggressive rise, followed by a three-month consolidation between $2,275 and $2,450. This earlier rise along with the consolidation period have formed a flag pattern on the weekly chart, typical of strong bull markets and indicative of a trend continuation trend. Using technical analysis, the projection from this flag pattern suggests a long-term target of 2900, just below the psychological level of 3000. While this target might take time to materialize, it sets the narrative for the upcoming months. Intermediate resistance is expected at $2,600.

• Short-Term Momentum: While the overall trend remains strongly bullish, traders are monitoring for any support levels or short-term consolidation patterns that could trigger bullish momentum, providing opportunities to initiate new positions that follow the trend. However, an immediate break below the $2,450 level could indicate potential weakness in the current upward wave. This could signal a short-term correction as the market seeks a support level to reignite further rallies.

• Potential Reversal Patterns: Only a newly formed reversal pattern below $2,450 would serve as a more serious warning, suggesting a lack of follow-through in the breakout and potentially leading to a consolidation period or deeper correction, postponing the immediate continuation of the rally. Short-term support levels to watch are $2,430 and $2,400, with a further break below $2,400 shifting medium-term momentum to bearish. Such a shift in momentum would be more significant if accompanied by the emergence of bearish news or if expectations for a Federal Reserve rate cut shift unexpectedly. Market participants should closely monitor these levels and news developments for potential changes in market direction.

Gold Daily Chart

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