The price action of gold is currently drawing near the lower limit of the massive consolidation range that was outlined in our previous analysis of the commodity. Given the underlying range-trading environment, bulls can try to take advantage of this by going long on the expectations for another rebound.
Bearish pressure was bolstered over the last few days as headline inflation in the U.S. and Europe is progressing according to the expectations of the FED and the ECB. This is so because the general recovery process is developing as expected, which negates the underlying uncertainty in the market. With that, the general demand for safe-haven assets is also depreciating.
Even still, consumption in China fell drastically in August, and a similar trend can be observed later today in U.S. retail sales. Such a performance would be demonstrative of the still bumpy and uneven pace of recovery in developed economies, which could be the catalyst needed for the anticipated rebound of the price of gold from the lower limit of the consolidation range.
Outlining the Borders of the Range
As can be seen on the daily chart below, the consolidation range spans between the 61.8 per cent Fibonacci retracement level at 1825.93 and the 38.2 per cent Fibonacci at 1770.42.
Profit & Loss
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