We believe that gold will move higher if the Euro confirms the breakout it started on August 2nd, 2024. However, gold’s upward adjustment might come with a delay.
RELATED – Will Gold Ever Hit $3,000 an Ounce?
The basis for this article is the historical positive correlation between gold and the Euro which comes from historical evidence that the USD and gold are inversely correlated.
Gold price chart in an uptrend
The price of gold is in an uptrend since the first week of March of 2024.
While price action has been flat since mid-April, there is no evidence that gold turned its uptrend into a downtrend. A consolidation is healthy in the context of an uptrend, not just in gold but in any market.
Gold’s rising channel is the standout feature of gold’s price chart (XAUUSD).
Note – the annotations on this chart are ours, the cycle analysis is also based on our own calculations. This chart, along with many other gold & silver charts, are featured every week in our premium gold & silver premium research notes (available in the restricted area of our site).
The Euro is trying to break out
While the daily gold price chart looks, the 10-year gold chart looks even better.
That’s probably because gold has completed a very long (hence strong) bullish reversal. The completion period was end of 2023 / early 2024.
It should not come as a surprise that the Euro chart is looking gorgeous right now. Gold and the Euro are positively correlated, not on short term timeframes but directionally on longer timeframes.
Below is the EURUSD weekly chart, with the key Fibonacci levels indicated with different colored areas. By far, the most important level is the 50% Fibonacci retracement level (purple fine line). As seen, the EURUSD is breaking out now, on its weekly timeframe.
This is huge. Because it’s huge, financial media is not talking about it.
Remember – financial media is (a) lagging (b) not focused on data points that matter most to investors (c) unable to spot the important ‘events’ in financial markets.
Yields are creating volatility
So, why isn’t gold ‘explosive’?
In the end, financial markets are forward looking, so gold investors should be anticipating the Euro breakout that is now in progress?
The threat that is discussed in this X post is not justified in our view. We are no gold perma bulls. We are simply reading the data and leading indicators, and there is no threat to gold at this point in time in the data other than a healthy pullback that may occur.
$GOLD This very simple chart WILL play out.
Doubting this will be the biggest mistake in your lifetime.
This chart is both the largest opportunity you will ever have, and also the largest threat you will ever face. pic.twitter.com/1DSoTZcWPF— Graddhy – Commodities TA+Cycles August 1, 2024
So, then why is gold not rising rapidly right now? The right answer, in our view, is Yields:
Yield are moving too fast. When yields move fast, they prevent other markets from trending; they tend to create volatility in all markets.
Moreover, the Yen, carry trade, is breaking out. This, combined with fast changing Yields currently, prevent stocks and commodities from creating trends in the short term.
We explained this in great detail in our latest gold & silver research report entitled ‘The Forecasted Volatility Window In Markets Is Here, Leading To A Consolidation In Precious Metals‘ (log in required).
We shared several more data points which help us understand how strong the expected gold and silver uptrends will be (hint: they are vastly different based on their leading indicators).
For now, one of the few focus areas for gold investors should be the evolution of the Euro breakout. This should be combined with gold & silver leading indicator analysis, particularly the data points we discuss every weekend in our research notes. Equally important: checking price action on a few decisive dates that come out of timeline analysis – here is how we practice silver timeline analysis at InvestingHaven.com)
