Gold: Bearish Development Just Around The Corner

1. Gold: Bearish Development Just
Around The Corner

2. Points To Be Covered Today:
• Gold: Bearish Development Just Around the Corner
• The USD Index
• Gold Managed To Break Below This Line
• GDX ETF
• 4-Hour Candlestick Chart
• XAU/USD Resistance And Support Levels
• Technical & Fundamental Overview

3. Gold: Bearish Development Just Around the Corner
• While we might see a small uptick in gold prices soon, it’s not likely
to last long.
• We should be prepared to open our parachutes any time now.
• The decline in gold continues, and while we might see a small pop-
up higher here, it’s unlikely to last.
• And why could gold move slightly higher and correct the recent
declines?
• Because it has just reached the rising support line based on its
previous important lows. The possible rebound could take place
based on this single development.
• However, just because it might happen doesn’t make it very likely,
and it doesn’t mean that taking any action now is justified. The
medium-term forecast for gold remains bearish.

4. Gold: Bearish Development Just Around the Corner - I

5. The USD Index

6. The USD Index - I
• We recently saw a breather that was similar in terms of time and
price to the previous patterns which happened after quick short-term
rallies.
• And now, the USDX is moving higher once again. As soon as it
exceeds the previous June highs, it’s likely to rally more
substantially, perhaps stopping temporarily at the late-March high or
rallying even higher, to 95 or so.
• Either way, gold is likely to get the bearish push off the cliff that will
likely take it below the above-mentioned rising red line. Gold’s next
support is at the previous 2021 lows – close to $1,670.
• Besides, while gold bounced off the rising red line visible on the first
chart, the yellow metal actually broke visibly below a much more
important support line.

7. Gold Managed To Break Below This Line
• In fact, that was the first time when gold managed to break
below this line and not rally back up.
• This time is already different.
• Moreover, let’s keep in mind that gold stocks’ relative
performance not only hasn’t stopped indicating the bearish
outlook recently but also provided a screaming sell sign once
again on Monday.

8. Gold Managed To Break Below This Line - I

9. GDX ETF

10. GDX ETF - I
• The GDX ETF declined and closed below its previous monthly lows
as well as below the late-April lows. This breakdown took place
without gold’s help, which makes it particularly bearish.
• Please note that the volume that accompanied this week’s declines
is relatively low, and the declines tend to end on huge volume.
Consequently, the low-volume readings imply that we’re not at the
bottom yet.
• Also, silver hasn’t broken visibly lower, and it didn’t “catch up” with
the miners, which could indicate that the bottom is in. So, it likely
isn’t.
• The above-mentioned breakdown was even more profound in the
case of the GDXJ – a proxy for junior mining stocks.

11. GDXJ – A Proxy For Junior Mining Stocks

12. GDXJ – A Proxy For Junior Mining Stocks - I
• The size of the recent “upswing” was comparable to the mid-
November 2020 one, so it confirms the analogy to this period
that I mentioned while discussing the gold’s chart yesterday.
• The next short-term downside target is at about $42 – a bit
below the previous lows, as that’s where the 50% Fibonacci
retracement line coincides with the previous highs and lows
(and also with the 2019 highs that are not visible on the above
chart).

13. 4-Hour Candlestick Chart

14. 4-Hour Candlestick Chart
• The 4-hour candlestick chart shows that junior miners moved
slightly higher at the beginning of yesterday’s session only to
decline in its final hours.
• So, it’s not that we’re not seeing any corrections – we do have
them, but they are so tiny that they are barely noticeable from
the daily perspective.
• All in all, it seems that the outlook for the precious metals
market – especially for the junior gold miners – is very bearish
for the following weeks and months, and it seems that the
profits on our current short position will grow much more quite
soon.

15. XAU/USD Resistance And Support Levels

16. Technical Overview

17. Technical Overview - I
• On the daily chart, gold price finally confirmed a bear pennant formation on Tuesday, after
it closed the day below the rising trendline support at $1771.
• The measured pattern target calls for a test of $1650 levels. However, the buyers could
find some solid support near $1750 and $1725, which is the recent lows and horizontal
(orange) trendline support respectively.
• The 14-day Relative Strength Index (RSI) is probing the oversold territory, currently at
30.58, allowing room for more declines. The bearish crossover on the daily time frame also
adds credence to the downside bias.
• Any recovery attempts are likely to face stiff resistance at the bear pennant support, now at
$1773.
• Further up, the $1780 round number could limit the advances.

18. Fundamental Overview
• Gold price tumbled on Monday, reaching the lowest in two months at $1751 after a negative start to a fresh week.
• Broad-based US dollar strength amid intensifying risk-off sentiment remained the key underlying theme, which
weighed heavily on gold price. Investors fretted that the rapidly spreading Delta covid strain in Australia and Europe
could derail the global economic recovery.
• Therefore, they scurried to the best safety net, the US dollar. Adding to the pain in gold price, ‘a very
optimistic’ Fed Governor Christopher Waller said that the world’s most powerful central bank may need to start dialing
back the QE program as soon as this year while increasing rates in late 2022.
• The Fed’s hawkish tilt combined with upbeat US Consumer Confidence data favored the greenback at gold’s expense.
US consumer confidence jumped to its highest level in nearly one-and-a-half years in June.
• Gold is back in the red zone, wallowing near $1760 after attempting a tepid bounce to the $1765 level. Despite a slight
improvement in the market mood, investors still remain cautious, keeping the dollar’s demand underpinned.
• Meanwhile, stabilizing US Treasury yields also remain a weight on gold price. Heading into the US ADP payrolls data,
the greenback is holding the higher ground near weekly highs, undermining gold prices. The ADP report is expected to
show 600K jobs addition in June versus 978K recorded previously.

19. Fundamental Overview - I

20. Gold: Bearish Development Just
Around The Corner

21. THANKS FOR LISTENING
Gold: Bearish Development Just Around The Corner