24K99 News On Tuesday (October 15), the price of gold continued to fluctuate around 2,646 US dollars, continuing the trend at the beginning of the week. Florian Grummes, managing director of Midas Touch Consulting, said that the current pullback is a welcome sight, and it will soon become a springboard for the next round of gains. He pointed out that the bullish flag was quickly resolved, and $2,700 and $2,745 are the next short-term targets for gold.

(Source: FX168)

Grummes said, “On September 12, the price of gold broke through the resistance zone between 2,520 and 2,535 US dollars, beginning the next phase of the two-year increase. By September 26, the price of gold rapidly soared to a record high of $2,685. Since the end of June alone, the price of gold has risen by about $400.”

“However, over the past three weeks, the gold market initially entered a phase of high volatility consolidation,” he said. “With the pullback to a low of $2,605 last Tuesday, bears were able to reappear for the time being. However, the psychological barrier of $2,600 could easily be held, leading to a sharp recovery to $2,661 on Friday.”

Grummes added that the Federal Reserve cut interest rates for the first time, the weakening of the US dollar, and the worsening geographical situation in the Middle East are the sources of the strong rise in the gold market.

“The overbought situation temporarily led to a healthy correction in the stock market this week,” he said. “Furthermore, there has been no sharp correction in the stock market since August. Seen from this perspective, the stock market pullback has at least released some heat.”

Although the price of gold rose sharply last Friday, from 2,635 US dollars/ounce to 2,660 US dollars/ounce, Grummes warned, “It is uncertain whether the increase can directly continue. To do this, the price of gold needs to break through a three-month downward trend and break through the $2,660 mark. Subsequently, it was critical to surpass the recent all-time high of $2,685. Only by removing these technical barriers can we say that the upward trend will resume”.

“In mid-August, after reaching our first major price target of $2,535, the price of gold traded sideways between $2,570 and $2,530,” he said. “However, during this four-week break, it soon became clear that the price of gold wanted to rise, so it was only a matter of time before the new breakthrough was a matter of time. As the price of gold continued to rise above 2,530 US dollars, the next round of increases began on September 12, causing the price of gold to soar to 2,685 US dollars in just two weeks. However, here, the strong rally rebounded from the upper edge of the upward trend channel in a textbook manner, and the overall price of gold fell by about $80 over the past three weeks.”

“Despite this, so far, this pullback has not led to a sell-out signal on the weekly stochastic indicator,” said Grums. “In contrast, the oscillator is stable in the saddle. Both lines are above 80, the bullish momentum is strong, and the upward trend continues at a high level. Therefore, if the pullback continues, it is likely that it will mainly play a role over time rather than another increase in price.”

Looking at the weekly schedule, Grooms said that the outlook is still promising. “In the best case, the pullback is over. Alternatively, weeks of consolidation could bottom between $2,585 and $2,550. At the latest, there was a broad and strong support area between $2,530 and $2,470.”

He found that bears had a dominant position last week.

“Stochastic indicators confirm this with clear sell signals,” he said. “However, Friday's sharp rebound has driven the bears into a desperate situation. Given the strong upward momentum in recent weeks and months, new buyers are entering the market quickly, even if the pullback is relatively small.”

Despite this, he pointed out that it remains to be seen whether the stochastic oscillator can reach the oversold region. “In any case, this requires continued consolidation or pullback,” he said. “As time passes and prices fall, the ideal target is the 50-day moving average of $2,545, which is rising rapidly but is still relatively far away.”

Grummes warned that if the bulls fail to break through last Friday's high of $2,661 and the all-time high of $2,685 in the near future, then a resuscitation could act within a flat downtrend channel in the form of a bullish consolidation flag. In this case, the remaining downside risk may be limited to prices between $2,590 and $2,610.

“Anyway, the daily chart is neutral,” he said. “While stochastic indicators still indicate that further correction is needed, Friday's rebound has forced the market into an impasse. If the underlying flag pattern persists, the rebound is likely to resume soon. Alternatively, the 50-day line would be more appropriate as a pullback target. The daily chart requires patience.”

“Central banks in emerging markets may take advantage of any significant fall in gold prices to buy gold,” he said. “In addition to this, US market openers and small investors in Asia are attacking gold traders. As a result, the positive momentum in the precious metals industry is likely to continue despite occasional resurgence and increased volatility.”

“The gradual return of Western institutional investors to the precious metals sector is also expected to further drive demand growth over the next few months,” he added. “Gold holdings in Western ETFs have been slowly increasing since spring, and there is still a lot of room for improvement. This development may further strengthen the precious metals market and push gold prices to expected to rise to $3,000 in the medium term.”

“Overall gains have not abated, but a slight pause is not surprising,” he said. “Therefore, under slightly cautious circumstances, the next few weeks could see a healthy return to the 50-day moving average of $2,545. This can at least to some extent dispel overly optimistic mood values.”

“Additionally, bulls could use Friday's rebound to push the price of gold even higher,” he added. “As a result, the bullish flag will soon be resolved, and the rebound is likely to continue more intense. The next short-term price target is around $2,700 and $2,745.”

“In any case, the pullback should be a springboard for the next round of gains,” Grums concluded. “However, in an environment where gold prices are rising strongly, we prefer silver stocks and platinum, which are sometimes still clearly undervalued, and the latter have not yet entered the upward phase.”