Gold starts a bearish correction
The long-term bullish trend of gold still intact even though the price currently trading lower. Currently, bearish correction is taking place as the global situation turned optimistic. On the election ground, Joe Biden has won the U.S election and Trump finally starts a transition of administration.
The coronavirus pandemic has not ended yet and the infected cases continue to grow near the end of the year. The world turned hopeful that an effective vaccine ready to be distributed next year. If the infection rate could be suppressed then gold prices are expected to weaken further.
We are waiting for a bearish correction in the gold prices and the price is finally corrected to our projected line. The bearish pressure is strong and traders might want to continue to observe the reaction first. If the price continues lower with strong momentum then we might see further normalization inside the bullish channel.
We have a lower low printed on the weekly chart and gold currently falls with strong bearish momentum. Observing the previous consolidation area, it seems the level around $1,680 – $1,750 will become of interest when the price hits it. Traders might want to refrain from taking long positions at the current time.
On the daily chart, we put a bearish channel on the chart, and gold currently heading to the bottom of the channel. Not much to do for now aside from waiting. Traders might want to watch the weekly and monthly chart for long positions chance. As long as the price continues lower on the daily chart, it is better to stay sideline.
The bullish trend has ended for now as the global situation slowly turned positive. The economy will recover after the coronavirus pandemic ended. Next year will become a crucial time for the world as vaccines are distributed. If the coronavirus pandemic ended then gold prices could weaken sharply and return to the bullish channel shown on the daily chart.
Traders might want to avoid long positions for now while observing the development of coronavirus and economy data releases.