XAU/USD price is consolidating in a range in the $1,990s after stalling in its intraday rally. Pressure from a strengthening US Dollar capped gains despite yields falling due to renewed global financial crisis fears. A bull flag is forming, which suggests the precious metal will rise to substantially higher prices if it activates. Key US Durable Goods Orders and PMI data came out mixed failing to give traders a clear steer on the metal’s next move.

The Dollar Index (DXY) has recovered from new monthly lows set on Thursday in the 101.90s, when it formed a bullish hammer candlestick on the daily chart, suggestive of a reversal after March’s sharp decline. The strong bullish confirmation so far displayed on Friday has started to become a negative factor for XAU/USD.

It is in an uptrend on a medium and short-term basis, so bullish bets are favored. On Thursday it breached above the key $2,000 psychological mark but overnight it has undergone a gentle pullback.

The pair may be in the process of forming a bull flag pattern on the 4-hour chart shown below, consisting of a flagpole that began at the March 22 lows and the flag itself composed of the correction that occured between March 23-24 and is still underway. If Gold price breaks back above the $2,003 highs of the flagpole, it will confirm and activate the pattern, leading to a probable run up that is an equal distance to the pole. In this case that will suggest a target at $2,050. A more conservative target would be at the 61.8% Fibonacci extension of the pole, at $2,023.

GOLD should be overtaken by bears below $2003-$2018

Mar 26 2023