- The intraday chart for gold shows that there is room for a stronger corrective rally.
- However, macroeconomic factors are aligned in favor of the bears.
Gold is trading near $ 1,730 per ounce, extending the previous two-day gain from the $ 1,680 region.
The 15-minute chart of the precious metal shows a breakout of the inverted shoulder-head-shoulder pattern, a bullish reversal pattern. The breakout has opened the doors for a rally to $ 1,764, the target according to the pattern.
The bullish bias would be invalidated if prices fall below the resistance of the pattern, now turned into support.
President Joe Biden’s $ 1.9 trillion stimulus plan, approved by Congress on Wednesday, is expected to propel the US economy to its strongest economic growth rate in 40 years. Additionally, it could add to inflation concerns, strengthening the case for an early tightening by the Federal Reserve.
If that happens, the yellow metal is likely to face selling pressure. Gold has fallen nearly 9% this year and markets have moved forward the timing of the Fed’s first rate hike to December 2022, from the previous forecast of 2024, on the back of rising inflation expectations.
15 minute chart gold
Gold technical levels
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