Now, let’s examine gold from another perspective – priced in British pounds.
Earlier this month, gold gave up the August gains and dropped below the rising resistance line once again. Additionally, the breakout above the 50-month moving average was invalidated. These invalidations are bearish signals.
Before we summarize, let’ take a look at gold priced in euros.
On the above chart, we see that the situation hasn’t changed much. Although gold priced in euros pulled back in the past week, it still remains below the previously-broken, rising support/resistance line (marked with red). Therefore, the medium-term implications remain bearish.
Summing up, the medium-term outlook for gold remains bearish. Despite last week’s show of strength, the downward trend is not threatened at the moment. However, taking into account the short-term action in the dollar and the True Seasonal patterns’ short-term implications for the USD Index, the short-term outlook for precious metals may not be as bearish as one might view it based on the medium-term trend. Simply put, a pullback in gold would not surprise us even though the medium-term trend is down.