Gold Technical Analysis: When Will it Break Above $2000?

Gold has been consolidating over the summer. After reaching $2080 for the third time in the last three years, sellers emerged on the assumption that gold price might form a triple top pattern.

But there is one thing about such a pattern that technical traders are aware of. That it – triple tops rarely form. Instead, they often merge into a triangular pattern, and the horizontal resistance is often overcome.

It is clear to the technical trader that gold’s recent rally started when the dollar’s strength reversed in 2022. The dollar turned the corner in October of last year as stocks rallied.

For instance, EUR/USD rallied from 0.95 to 1.12 since those October lows. So did gold, rallying from $1640 to $2080. So, it is a US dollar story.

However, in the case of gold, there is something more. The $2000 level is a pivotal one. As such, bulls may want to see the gold price climb above the pivotal level and holding there for several sessions.

By doing so, the market puts pressure on the horizontal resistance seen at $2080.

All eyes are on the Fed and its monetary policy decisions

Now that we have established that the dollar drives the gold price movements, we should focus on the Federal Reserve’s decisions and how they may influence the chart above.

Later today, the Fed’s favorite measure of inflation is due – the Core PCE data. If it confirms that inflation has peaked, the gold price might jump above $2,000, as the news would be bearish for the dollar.

Moreover, if the August NFP report misses expectations tomorrow, gold’s rally may extend further.

The technical picture is rather bullish than bearish, despite the possible triple top formation. For the triple top to hold, the dollar should strengthen again – difficult to see in times of soft inflation and labor market data.

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