Looking at the popular spot gold futures contract on the above four (4) hour MT 4 price action chart, gold is trading around $1,860 per ounce during the morning Asian trade session.
The spot contract has seemingly formed a bearish flag chart pattern which could lead to a corrective move lower at some point.
Spot gold traders are watching ongoing political drama in the United States closely. President Donald Trump is refusing to take any responsibility for last week’s deadly riot in Washington DC, the nation’s capital city. He says that his words that led to last week’s violent riot and coup attempt were “totally appropriate.”
Further, Trump warned that he has “zero risk” of the 25th Amendment being used and that incoming President-elect Joe Biden should be careful. Overnight, Vice President Mike Pence said that he will not use the 25th Amendment. The U.S. Congress will likely go ahead with impeachment proceedings against Trump.
The United States is publishing closely monitored monthly consumer price index (CPI) data. This is both the core and headline number. The European Union will release their monthly industrial production number as will their third largest economy, Italy.
Daily Spot Gold Technical Analysis (XAU/USD)
Looking at price action this gold contract (XAU/USD) is in the process of recovering from a monthly low price point at $1,816 per ounce. However, the bearish flag could please the bears. A bearish flag is formed when price action pauses then moves lower as sellers get ready to enter an underlying market.
With that said, a daily close below the bottom of the flag at $1,840 per ounce opens the door to challenge the next layer of support that lines up at $1,816/15. In this case the correction lower from the 6 January 2021 high price point, at $1,960, is back in play. The next layer of technical support lines up at $1,800 per ounce.
A daily close back above $1,870 per ounce invalidates the bearish flag chart pattern and the gold buyers should then return to the market.