Gold holds consolidation range to start July trading | Forexlive

After a brief attempt to hold a firm break above $2,400 in May, gold has settled down to rest in more of a consolidation range since. The technical writing on the wall was a forming head-and-shoulders pattern. But the current shoulder formation is one that is still playing out a fair bit.

So, what’s next for gold?

The situation is still very much the same as what was highlighted two weeks ago here.

It’s about being wary of the prospects for the head-and-shoulders pattern to play out. And that has the potential to eye a move towards $2,100 or at least the 200-day moving average (blue line) at $2,125 currently.

But in the bigger picture, the bullish undertones still remain. Major central banks are still moving to rate cuts and that is macro environment that will support gold. Adding to that, central banks globally are also stepping up appetite to buy more of the precious metal so demand conditions are also lining up.

And even if we do face up against escalating stagflation risks in the months ahead, that is another uncertainty that gold can work with. Considering the risks there, the precious metal is also a potential beneficiary as a traditional “inflation hedge” but also as a safe haven amid a weakening global economy. That is if the 1970’s were anything to go by.

However, for now, it’s all about waiting on the next technical break in gold. Until that comes along, it’ll be a bit of a snoozer watching the ongoing consolidation phase just above $2,300.