Gold's price stability signals looming rally

• Gold recovered from a weekly low, stabilizing on Friday, suggesting a potential rebound.

• The bottom in February 2024, around $1996, is set to continue further upside movements.

• The gold is set to target $3,000 once these short-term consolidations are completed.

Last week, the gold market experienced a downturn but recovered on Friday, ending the week with stability. The chart below offers a short-term technical overview, showing that the market continues to trade within a sideways range. This consolidation in the gold market suggests price stability and typically precedes a potential move higher. The long-term outlook for the market remains firmly bullish, suggesting that these consolidations will likely lead to a significant rally.

For instance, the consolidations in January and February 2024 marked a notable period where the gold market found a bottom at $1996. This price bottom was quickly reversed higher to close the quarter positively. A trade alert was issued to premium members to buy gold at $1996 in the spot gold market, and the market responded by rallying the following day. The price consolidations observed in May, June, and July indicate that the February bottom at $1996 has likely set the stage for a solid upward trend. The channel lines currently act as barriers to this rally, but once the price completes these consolidations, it is expected to surge higher, targeting the $3,000 region.

Final words

In conclusion, gold's recovery from its weekly lows signals a promising potential for price strength. The significant consolidation period ended in February 2024 when gold established a strong base at $1996 and breached the yearly pivot of $2,075. This underscores a robust bullish outlook in the gold market, signaling its potential for further upside. Currently, prices are stabilizing within broad ranges, and once the bottom formation is complete, the ensuing upward movement could be even more pronounced. Investors may consider capitalizing on price dips in the gold market.

The tame US inflation data, particularly the modest increase in the Personal Consumption Expenditures (PCE) Price Index, has reinforced expectations that the Federal Reserve will lower interest rates in September. This anticipation will likely boost investment in gold, driving its price higher as investors seek alternatives to yield-bearing assets.

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