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October 4, 2021

Gold Is About To Break Out- How To Trade This

Frank Cabibi

10/4/2021

Investors are eyeing this precious metal after seeing a considerable drop in the USD and stock market. Bond yields rose this morning to as high as the 1.50% yield level again which is now fighting the momentum of gold.

Our outlook

Although gold has been mostly bearish these past couple months, a big technical indicator just got broken which could prove to have some short term momentum. I can't say whether this will last mid-to-long term, but I do think that this week could be bullish for the metal. COT also suggests further bearishness over time as the number of long contracts are decreasing while shorts are getting picked up. So, looking at the next couple days, gold looks like it can still move higher.

Trade Setups

XAUUSD

Gold has already broken above this falling trend line on the 1D chart and may test resistance around the $1790s. However, price is going to have to close above this falling trend line in order to be a bullish technical indicator. Otherwise, we might just see a daily spike before retesting the lows. A close above this level may also suggest a test up at the 50 DMA or higher into the $1800s.

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