August 14, 2022
  • August 14, 2022

Gold falls as rates rise, XAU / USD close to support

By on September 28, 2021 0

Gold Price Talking Points:

  • Gold prices continued to decline following the FOMC’s rate decision last week.
  • The gold price action has built a descending wedge formation with support around a longer term Fibonacci level. And the bullish flag as a whole remains despite the short to medium term bearish price action being shown.
  • The analysis contained in the article is based on Price action and graphic training. To learn more about price action or chart patterns, check out our DailyFX Education section.

Gold prices are set to close a bearish month in September as the yellow metal stumbled past last week’s FOMC. Gold prices retreated last Wednesday, guided lower by the Fed’s dot-plotting matrix which showed a potential faster rate take-off, possibly starting as early as next year. Gold hasn’t had much of a supply behind it since then with Wednesday and Thursday pushing prices below support, and a slight rebound on Friday found resistance to that previous support as price action continued to move lower at opening this week.

At this point, there is a nearby Fibonacci level, as the 38.2% retracement of the 2018-2020 major move stands at 1725.69. There is another major support level below that of 1680, which currently marks the low of 2021. That price was in play in March, helping to set up a double bottom formation, and then it came back in early. August during the gold “flash crash” scenario. Collectively, these prices provide some supportive structure even despite the bearish price action that has been showing up since last week’s FOMC.

Four hour gold price chart

Graphic prepared by James stanley; Gold on Tradingview

Short-term gold price strategy

At this point, the medium to short term trends are unmistakably bearish. Longer term, however, the bullish flag remains in order and this may keep the door open for broader approaches, but what happens in this region of 1680 will be critical to whether this pullback is a buying opportunity for Longer. scenarios in the long term.

Probably the most compelling part of the current scenario is what has yet to happen: Although the markets operate with risk aversion themes as rates continue to rise, the sell-off of gold has been rather orderly, a stark contrast to the ‘flash crash’ scenario that manifested itself in early August. Deductively, this can tell us something.

To learn more about the bull flag, to verify DailyFX Education

Weekly Gold Price Chart: Bullish Flag Remains

Weekly Gold Price Table

Graphic prepared by James stanley; Gold on Tradingview

Gold: Short-term outlook

In the shorter term, this recent somewhat orderly gold selloff has taken the form of a falling wedge formation with a base building around this Fibonacci level. Falling corners are often approached for the purpose of bullish reversals, looking for the lack of aggressiveness at the lowest to possibly play a role in a reversal pattern. This can keep the door open for short term bullish approaches that can synchronize what this longer term bullish aspect explored above.

On the short side of gold, a potential breakout exists below Fibonacci support with a possible open door towards the 1680 support. There is another possible support between these two prices, around the psychological level of 1700.

To learn more about falling corners, psychological levels Where Fibonacci, to verify DailyFX Education

Eight Hour Gold Price Chart

Eight Hour Gold Price Chart

Graphic prepared by James stanley; Gold on Tradingview

— Written by James stanley, Senior strategist for

Contact and follow James on Twitter: @JStanleyFX

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