Fresh buy signal for gold

Fresh buy signal for gold
For the past several months, traders have constantly been mentioning the weakness of gold, especially during the times of rising inflation. It was common investing knowledge that gold is supposed to be the kind of asset that protects you against inflation, so both CPI and XAUUSD should be climbing higher together.
Initially, gold failed and was really struggling, but in the last few months - precisely since the beginning of November - gold has been shining again. Of course, the previous weakness could have contributed to the stronger USD but, nevertheless, gold was not a good asset to possess in 2022. As we said, all that changed in November. The price quickly created the channel up formation (green), which allowed the price to climb gradually higher. The new year started with a surprise – the price broke out of the channel up formation - but this time, to the upside! This is pretty uncommon and can be seen as a display of power.

This week brought up handsome technical correction locked inside of the flag (red lines). Wednesday comes with a breakout from this pattern. The breakout, as you may suspect, is to the upside, which in theory means a fresh buy signal. Positive sentiment stays here, as long as the price stays above the upper line of the channel-up pattern. Price dropping below that support is less likely to happen but would be treated as a signal to abandon longs, at least for a while.
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