As Benjamin Wong, Strategist at DBS Bank, notes, XAU/USD’s technical chart shows the possibility of a near-term bullish inverse head-and-shoulders pattern, that requires a break over $1830 for validation. Once validated, gold would open up further upside.
The balance of risks appears to be siding with a nascent bull
“Gold is quietly making a bullish inverse head-and-shoulders since June – thus the nascent gold bull is quietly knocking at the door. The neckline stands around $1830, for that pattern to take off. A secondary confirmation probably requires gold to surmount and sustain over the weekly Ichimoku’ cloud fringe resistance at $1873.
“Should the inverse head-and-shoulders pattern get validated, gold would target the upside into $1930, perhaps even $1980 (over the June highs). A break under $1720 would however nullify this potential pattern.”