Commodities Watchlist: Gold (XAU/USD) Ready to Break Out Soon?


 Heads up, gold bugs!

The precious metal is in a holding pattern these days, which means that it could be bracing for a big move soon.

Here’s what you should watch out for.

Gold (XAU/USD): 1-hour

Check out gold’s higher lows and lower highs!

The commodity price is consolidating inside a symmetrical triangle on its hourly time frame and is currently testing support.

A break lower could take it down by the same height as the chart pattern, which spans $1,950 to around $2,000 per ounce.

In other words, a move below these current levels ($1,960) could take the precious metal down to the $1,910 area. Similarly a break above the resistance around $1,980 might be followed by a move up to $2,030 next.

But what are technical indicators saying?

So far, it looks like the odds are in favor of another bounce off support, as the 100 SMA is above the 200 SMA while Stochastic is almost indicating exhaustion among sellers.

In that case, we might just see gold prices climb back to the $1,960 area from here.

Then again, note that the gap between the moving averages is narrowing to reflect slowing upside pressure and a potential bearish crossover. If that materializes, sellers could regain the upper hand a be able to sustain a move below support.

Recall that this commodity managed to get a boost from safe-haven flows when banking sector woes first broke out, which means that another round of these jitters could spur another leg higher.

In addition, the upcoming release of U.S. core PCE price index a.k.a. the Fed’s preferred inflation measure might also impact dollar direction and therefore XAU/USD price action.

Downbeat results could give the Fed more reason to take things slow with their tightening efforts, which could be bearish for the Greenback and bullish for gold.