In my previous analysis in the Institutional View, I highlighted the bullish reversal of gold from support at $1,811 an ounce. However, recent developments have forced a downward revision in its outlook.
Despite testing its projected high of $2,075, gold faced a decisive rejection when attempting to break through $2,100 (refer to chart below). This "bearish reversal" is characterized by a higher high than the prior day, a lower low than the prior day, and a close below the prior day's low. Moreover, after briefly testing support at $1,980, bullion struggled to rally and remained below $2,100, with negative momentum divergence.
The weekly chart reveals a 3.5-year rounding base, but recent price action highlights the failed attempts to close above $2,100. Even though intraday trading breached this mark, gold was unable to sustain the break in closing prices - marking its fourth unsuccessful attempt.
Unfortunately, gold-mining stocks are not providing the desired bullish support. Both major gold-mining indexes have struggled to maintain levels above their respective 200-day moving averages, indicating a bearish long-term trend.
This period is crucial for gold. To position itself for a decisive break above $2,100 in the upcoming weeks, it must hold the support level of $1,950 to $2,000. Any breach below $1,950 could potentially lead to a decline back to at least $1,900 or even the mid-$1,800s.
Overall, the outlook for gold remains uncertain. Further analysis and monitoring are necessary to determine whether gold can regain bullish momentum or succumb to bearish pressures.
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