Insights 
Gold Prices and the Bullish Pennant Pattern
The focus is on the $3,200 support, marking the pennant’s lower boundary. A confirmed break below this level could lead to a deeper correction, while a move above $3,300 could reaffirm a bullish trend.
From a broad perspective, Gold remains in a consolidation phase after reaching a record high of $3,500 in April. The market expects interest rate cuts while safe-haven demand persists. Until a breakout of the current range occurs, Gold is likely to remain range-bound, influenced by macroeconomic data and Fed policy signals.
Central banks increased their Gold reserves by 1,136 tonnes in 2022, the highest purchase on record, with countries like China, India, and Turkey quickly increasing reserves. Gold has an inverse correlation with the US Dollar and Treasuries. When the Dollar depreciates, Gold tends to rise, serving as a hedge against inflation and a haven asset.
Trade Implications and Strategy
Gold prices are influenced by factors like geopolitical instability and interest rate changes. Yield-less, Gold usually rises with lower interest rates but drops with higher rates. The US Dollar’s strength is a key factor, as a strong Dollar can suppress Gold prices, while a weak Dollar may boost them.
The recent loss of momentum in gold stems largely from shifting expectations about interest rates in the United States. Traders who had priced in a more aggressive easing cycle have had to revise their outlook. Softer inflation figures—while typically supportive of gold—are being weighed against labour market resilience. Powell, for instance, has noted that wage growth remains firm and job creation steady. That combination makes it harder for the Federal Reserve to act swiftly on any dovish pivot.
Price action reveals that we’ve slipped beneath the 20-day moving average, which had previously offered short-term support. The Relative Strength Index hovers near neutral territory, just under 50, reinforcing the view that gold isn’t trending strongly in either direction right now. It’s treading water, essentially, caught between dovish hopes and hawkish caution.
Support around the $3,200 level is now the area to watch. It aligns with the lower edge of a bullish pennant formation. If that line gives way, we should prepare for more downside pressure—a deeper retracement is then likely. That said, any break above $3,300 would suggest strength is returning, potentially inviting trend-followers back in.
For those of us active in the options and futures space, this is a waiting game. Not one to be idle in though—ranges offer opportunities too, especially for calendar spreads or straddles that capitalise on implied volatility mispricing. The key is to accept that the metal may not trend dramatically in the immediate term unless macro data or policy triggers a decisive break above or below this contraction pattern.
The broader story hasn’t changed all that much. We’re still within touching distance of April’s highs, and while momentum has flagged, gold continues to attract demand from official sector buyers. China and others might not be moving as quickly as they did in 2022, but they’re still active, and that matters. These reserve accumulations offer a steady bid—less reactive than ETF flows, but more durable.
Currency strength remains a pivot variable. Whenever the US dollar shows firmness, gold prices come under pressure. Conversely, FX softness tends to breathe some life back into bullion. The inverse pattern with yields hasn’t vanished either. Real rates tick upward, and gold tends to struggle. And when those rates slip, the metal catches a bid.
The next few weeks may offer value for those willing to play the range, rather than betting on a breakout. Directional trades tied to Fed expectations or CPI surprises should be approached with shorter time frames in mind. Monthly expiries could align well with upcoming economic prints—PCE, payrolls, CPI—all of which are capable of moving the needle.
This isn’t a period to chase. Rather, it’s one to position incrementally, using technical signals and macro catalysts together, noting reinforced zones of resistance and support. The market isn’t impulsive at the moment, which rewards precision more than speculation.
We’re watching those long-term buyers—central banks, yes, but also asset managers—stepping in during structural dips. They don’t need confirmation from moving averages or oscillator thresholds. Their flows are anchored to allocation models and multi-quarter outlooks. But in the meantime, until one side gains the upper hand, we’re in a coil. And coils have a habit of snapping.
