Gold nudges up to start the week but price holds within technical pennant

Gold is once again in the spotlight after a solid showing yesterday to kick start the new week. The precious metal moved up by 1.7% to back above $4,100 as risk appetite shows some improvement while traders are also pricing in over 70% odds of a Fed rate cut for December. That sees gold nudge up to a ten-day high but from the charts, it’s nothing too outstanding.

There is a flag/wedge/pennant building for gold this month and price action continues to hold within the confines of that as seen above. As such, that technical pattern is now going to act as a key momentum factor in determining the next big move for gold.

A breakout from the chokehold and above $4,200 will open the floodgates for gold to target the highs for the year again. The momentum will have added credence considering the strong seasonal months in December and January for the precious metal typically.

Meanwhile, a downside break will quickly see the $4,000 mark get called into question before revisiting the late October lows near $3,900. That will be a crucial support level to watch as a break there opens up the path back towards a potential test of the 100-day moving average (red line) just above $3,700 currently.

So while the fundamental drivers are still very much a consideration for gold price action, the technical posturing above suggests that the charts will be the ones in deciding the directional pace of the game for the next move.

This article was written by Justin Low at investinglive.com.