Bullish Outlook for Gold Price as Inverted Head and Shoulders Pattern Forms

Posted Friday, March 3, 2023 by
Arslan Butt • 2 min read

The price of GOLD has slightly increased to $1,840.00 from $1,830.00, but it has been fluctuating back and forth in the Asian session due to market volatility. The US Dollar Index (DXY) is expected to decline as it seems fragile, above 104.80. Investors in the Asian session have become nervous about the Institute of Supply Management’s release of the United States Services PMI (ISM), which has caused long liquidations in S&P500 futures. However, the 500-stock index futures rose sharply on Thursday because of the lessening geopolitical tensions between the United States and China.

China’s Deputy Commerce Minister has stated that China is willing to hold honest conversations with the US to eliminate limitations on bilateral trade and investment, and to create a stable and predictable economic and trade environment to boost business collaboration confidence.

Despite this, concerns about future rate hikes from Federal Reserve (Fed) chair Jerome Powell still exist, as further rate hikes could undermine producer confidence. Additionally, if layoff programs in technology corporations spread to other areas, the job market could deteriorate.

Gold Technical Outlook

As of today’s open, the GOLD price is consolidating above the $1,828.70 level and shows a bullish bias. Upon closer examination of the chart, we can see that the price has formed an inverted head and shoulders pattern with a confirmation line located at $1,844.00. Breaching this level will push the price to achieve new gains, starting with a test of the $1,878.80 level.

The intraday basis Stochastic provides positive signals, while the EMA50 supports the price from below, which further encourages a bullish bias for today. However, it is important to note that breaking the $1,828.70 level will stop the positive scenario and push the price to return to the correctional bearish trend.

Therefore, we suggest a bullish bias for today and advise breaching the neckline to activate the positive effect of the suggested pattern.

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