Has Trump’s "Chip for Rare Earth" strategy backfired?
My research shows a new gold apex pattern is set up for Sept. 11~15. Around Sept. 11 or after, gold will attempt to reach this new apex level near $1,766. This price pattern is important because the Fed rate decision date is Sept. 20~21, and a host of economic data reporting comes out the week before the Fed decision.
My educated guess is gold and silver will begin a volatile breakout move, possibly rolling lower to retest support near $1,672, before attempting to move higher as global fear starts to elevate. I believe the current lower support level is critical to understanding the opportunities in gold. If the $1,672 level is breached to the downside, it means that gold has lost a critical support level and will likely trend lower.
Given the statement by Fed Chairman Jerome Powell last Friday, it seems the Fed will not pivot. It will do what is necessary to tame inflationary trends.
Recently I posted two articles about gold and the Fed that you should review as we move toward the Sept. 11~15 dates.
- Aug. 9, 2022: GOLD-TO-SILVER RATIO HEADING LOWER – SETUP LIKE 1989-03
- Aug. 3, 2022: SHOULD WE BE PREPARED FOR AN AGGRESSIVE U.S. FED IN THE FUTURE?
Weekly Gold Chart
I suspect $1,766, the current apex level, will play a critical role as new support/resistance going forward. The strength of the U.S. dollar should have weakened gold more aggressively, but gold is holding up quite well in the face of an ever-stronger dollar.
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Some major event may occur near Sept. 11~15 – just before the Fed rate decision on Sept. 20~21.
Daily Gold Chart
Price apex patterns, like this one in gold, usually resolve with an aggressive volatility event before establishing any new trends. I often term these events a “washout rotation.”
For example, look at the apex of the previous (YELLOW) flag/pennant formation. A price neared the apex, but it stayed low compared with the lower yellow boundary. Then, a price reached the true apex, and a broad 6.5% price rotation took place, eventually settling near $1,780.
What happened next was price settled into a rally phase originating near $1,780 and continuing up to $2,077 – a +17.75% rally
Concluding Thoughts
I can’t predict the future any better than you can. But I do understand flag/pennant formations. I believe the current pennant formation in gold will resolve to the upside – possibly launching gold into another significant rally phase.
I continue to warn my followers that gold and silver must initiate a new upward price trend to break free of the current downward price trend. Yes, we saw a strong rally attempt in early 2022, but that topped out and slid down over the past 4+ months. Now, as we resolve the current price apex, we’ll need to see a substantial price rally above $1,828 to confirm any potential for a new bullish rally phase in gold.
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