Gold Could Be About To Make A Big Move

Gold has been struggling to move higher before a selloff takes the metal back down to the lows. One of the problems is coming from COT which is suggesting a decrease in long contracts. However, price is still moving upward towards yet another test at a key level. Here are a few catalysts that could eventually push gold back to the $1900s.

Higher Inflation

Inflation is a major factor in the behavior of the stock market, USD and gold. Annual inflation rate jumped to 7% which is a multi-decade high, but gold is still struggling to move higher. This is likely because investors are already expecting a higher interest rate in March, but such a high jump in inflation cannot be quelled from a single hike of 25 bp from the Fed.

Wedge Breakout Pattern

Another potential catalyst is caused by the technical pattern setting up on the 1D chart. Gold has been stuck in a long term wedge for over a year, but recent activity suggests a breakout to the upside.

Here is gold on the 1D timeframe. Movement to the top of the wedge has become more frequent meaning buyers are testing the level more and seeing if they can catch a breakout. This is important to note since gold is coming back up to make another test on this level. If we do see a break, I think we could watch gold go all the way to the $1900s level again. However, I am mixed about a long-term uptrend in gold's price after hearing the very hawkish Fed statements going all the way through 2024.