The gold price has been held in a flat range since March, amid diminishing sentiment against the USD, which has steadily appreciated since May. Strategists at Credit Suisse are on high alert for a potentially significant breakout in gold price that would open the $1,565/61 region. Strategists’ technical analysis results and forecasts
Strategists see a possible eventual drop to $1,452/40 for the gold price
Credit Suisse strategists see rising US real rates as a major negative factor for gold:
We believe more USD strength will be a headwind for gold. However, this is an important driving force for US real interest rates. In the baseline scenario, we see that US real interest rates are in the process of forming yield bases and rising real interest rates are an important negative driver for the yellow metal. However, we remain on high alert for a potentially significant break below.
Strategists suggest that below the $1,759/54 support (year lows in March, April and August) is needed to clear the way for a retest of the major support at $1,691/77. Strategists point out the following technical levels:
A break below $1,691/77 means a major top as well as a “bearish triangle pattern” formed to mark a key bearish reversal change. If confirmed, we expect this to act as a catalyst for an initial 50% pullback and a drop to the 200-week average of $1,565/61. At first, we expect the $1,565/61 region to hold in the big picture, but ultimately, a bearish door to $1,452/40 could be opened.