Gold Inverted Head-And-Shoulders Suggests $2,000+ Is Next Upside Target

The comments below are an edited and abridged synopsis of an article by Chris Vermeulen

After a rebound from the lows in August, gold is setting up the right shoulder of what appears to be an inverted head-and-shoulders pattern. The US dollar’s recent weakness suggests any breakdown below $91.70 could prompt a new bullish price advance in gold, targeting highs above $1,900 and attempting to reach $2,100 or higher.

Gold Inverted Head-And-Shoulders Suggests $2,000+ Is Next Upside Target | BullionBuzz | Nick's Top Six
Archer Shooting by Legs with Gold Bow and Arrow. Flexible Gymnast aiming Target standing on Hand upside down. Goal Achievement Concept, Studio shot over Black background

The dollar is experiencing an upward price trend after breaking downwards from highs near $93.70. Recent lows near $91.93 suggest that a peak may have set up. The $91.70 level is critical to the setup of the inverted head-and-shoulders pattern in gold, which may trail downward to levels near $1,775 before finding real support for the next upside price rally.

Once that right shoulder has completed, likely near $1,775 or higher, the next phase for gold is a price rally above $1,845 and an attempt to reach the $1,920 to $1,950 level before year end. A head-and-shoulders pattern usually prompts a rally equal to the left shoulder or head breakdown range. This means the next rally phase for gold will likely be a minimum of +$150 to +$165 from the right shoulder level.

The monthly gold chart pattern that suggests a strong upside price channel and a double-bottom continue to confirm strong potential for an upside price rally. The CYAN upward-sloping price channel suggests gold will find strong support near $1,765 and the double bottom suggests gold has already confirmed strong support near $1,695.

The dollar’s transition to the end of this year will be key to understanding the type of rally to expect precious metals. Once the dollar falls below $91.70, the upside price pressure in precious metals should begin to accelerate. The dollar’s $91.70 level is the key catalyst for gold to break out of this inverted head-and-shoulders pattern.

A weaker dollar will shift how capital is deployed in US equities markets and foreign markets. If it breaks downward, below $88, we may see a shift of capital into foreign or emerging markets. But as long as the dollar stays above this key level, the equities markets are likely to continue to attract foreign capital and continue to attempt to trend higher.

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