In September, gold experienced significant price fluctuations, soaring to new heights above $2,600. However, various technical indicators suggest that a correction may be on the horizon in the upcoming weeks.
For example, the forecasting platform Gold Predictors has indicated a bearish perspective. According to their analysis, if gold maintains its current pace without undergoing a minor correction, it may face a more pronounced decline subsequently, as detailed in a post on X dated October 7.
Since the start of 2024, Gold Predictors has observed a steady increase in gold prices, with a notable acceleration throughout September. Nevertheless, recent chart patterns suggest that a pullback could occur in October or November.
Following a prolonged rally this year, the analysis highlights that gold has breached a consolidating wedge pattern, indicating the potential for more upward movement. However, a short-term correction towards the $2,500 support level is also a possibility, after which an uptrend may resume. The experts emphasized that minor corrections should be perceived as a normal and healthy aspect of price movements.
Gold Approaches a Pivotal Point
Conversely, trading specialist Alan Santana noted in a TradingView post from September 30 that gold is encountering a critical point and may experience a short-term decline. He emphasized that gold has reached the upper limit of a two-month upward trend and is signaling multiple indicators of an impending pullback.
Santana pointed out that gold is not only at the channel’s peak but also nearing the apex of its Sine Wave sequence. Additionally, he expressed concern over the one-day Moving Average Convergence Divergence (MACD) approaching a bearish cross, which has historically served as a reliable sell signal over the past four months.
Taking these factors into account, Santana predicts a short-term bearish trend with a target of $2,615, which lies just above the 0.382 Fibonacci retracement, a level that has provided strong support in recent months.
Influence of U.S. Presidential Elections on Gold Values
In discussing the reasons behind gold’s momentum in September, a trading analyst going by the name SmartReversals noted that its trajectory aligns with seasonal trends, offering insights into potential future movements.
In an X post on September 30, the analyst pointed out that gold has historically tracked patterns, particularly during election years under Democratic administrations. This analysis, highlighting research data from Bank of America (NYSE: BAC), illustrated how gold typically ascends in September when a Democrat is in the presidency, followed by a subsequent correction.
The analysis speculated that if this historical seasonality persists, gold may soon encounter a more significant pullback, potentially jeopardizing its upward trajectory towards the $3,000 per ounce mark. This speculation arises during a time of concern over Democratic candidate Kamala Harris’s proposed corporate tax increase, which might lead to a stock market downturn if she wins in November.
It’s essential to recognize that gold has gained value amid rising uncertainties regarding the U.S. economy and increasing geopolitical tensions in the Middle East. Concurrently, the metal appears to be targeting the $3,000 threshold after markets surged following the Federal Reserve’s interest rate reductions.
Consequently, a subset of investors, including hedge funds, remain optimistic about gold’s continued ascent, with the $3,000 level seen as a favorable target. Meanwhile, there are concerns that the significant rally in gold throughout 2024 might be nearing its end, with warnings that this could signal a potential black swan event.
As of the latest reports, gold was trading at $2,661, reflecting an increase of over 1% in the preceding 24 hours. On the weekly chart, the metal registered a rise of 0.1%.
Despite gold’s remarkable rally, technical indicators indicate a potential short-term correction. Thus, investors should pay close attention to historical trends, geopolitical dynamics, and economic uncertainties to better understand how the price of the metal may evolve.
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