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July 1, 2022

Strong Buy Setups On Gold With One Big Warning

Frank Cabibi

A lot is going on in the market right now, and investors have to decide where to put their money. Gold is one of those assets that still remains uncertain and price has reflected that. There are some key things could launch gold's price higher, however, a big indicator casts a shadow over the metal's near future.

Near-term Outlook on Gold

gold

Price hit a multi-bottom low before abruptly bouncing higher today. Due to the strength of this support level, gold has a good chance of catching a decent swing to the upside. So, near term, a long trade could be made out of this metal.

Today, gold's price sunk before the New York session on dollar strength. It seems like there was a Friday selloff as investors turn to liquidate their risk-prone positions.

If price does run up, it probably won't get higher than the $1860s range if price even moves that heavily. Some might even argue that the metal will not be able to break above the falling trend line that has served as much resistance in the past. Overall, it looks like there is limited upside for gold in the short run.

Long Term Outlook on Gold

The long run, however, looks more promising. Inflationary pressures are not going anywhere any time soon. Conflict in Europe continues to cut supply and drive commodity prices higher. Economic growth is slow to recover as well. All of these things are drivers of gold.

This isn't to say that price may continue to fall to lower levels. There are key levels of support that could be good for building positions.

In the end, it's how you as a trader would like to go about this. Do you want to trade gold or invest in it for the long run? Building positions will take much longer but could end up being more profitable. If you don't feel comfortable in the long run, quick trades would work too.

The Big Warning

Something dire has entered on the bullion's price chart, something every investor dreads. A death cross pattern looms over investors' heads as the 50 day moving average gets real close to crossing under the 200.

The next couple of days will determine the overall strength of the market for gold. If the death cross ends up happening, we could see gold slash down to the $1600s and even the $1400s. This is extremely concerning for investors as they still try to decide where gold will move in the future.

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