Gold, the Chart of the Week: $1,805 could be the midpoint for the meantime

Gold bulls emerge from under $1,800, more to come for the week ahead?
A catalyst is awaited for the next significant downside move.

Gold has been pressured by a stronger dollar as central bankers are set to tighten more aggressive their monetary policy amid persistently high inflation. With that being said, the steady decline in the yellow metal was briefly interrupted after the release of US annual core PCE price index came in at 4.7% in May vs consensus of 4.8%.

However, there are prospects of a bullish scenario for gold, at least for the short term, as illustrated in the following analysis:

Gold, weekly chart

We have a compelling chart pattern in development on the weekly chart. This is an M-formation and the price has a habit of retesting the neckline of such a pattern in what is usually more than a 38.2% Fibonacci retracement. In this particular case, the $1,830s are an attractive area of potential supply.

Gold, daily chart

This can be identified on the daily chart also given the resistance area of what is presumed to be a block of institutional orders that could act as resistance in a 78.6% Fibonacci retracement of the current bearish impulse. An M-formation is also identified in this time frame.

Gold, hourly chart

From an hourly perspective, the price has rallied sharply which has left an imbalance of bids and offers lower down towards $1,790. This area could be revisited prior to the move higher.

''While the bias remains to the downside in gold, participants will need a catalyst to shake out the complacent longs in precious metals,'' analysts at TD Securities argued. ''Considering the warning signals being fired by our commodity demand indicator, silver markets appear more vulnerable to the downside.''

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