Gold may start rising from the 1700$ mark

Prospects, at first glance, are devoid of any hope. At the beginning of September, the sellers returned quotes below the significant lines of the 50- and 200-day moving averages and the descending resistance line formed by the peaks of August 2020 and May-June of this year. Locally, gold is also being pushed ever lower, as seen by a series of descending local lows since June.

The pressure on the quotes of the precious metal is very stable, and on the daily charts of RSI the recovery from the oversold area very soon led to a new round of pressure on the price.

Gold Quotes Chart

Fundamental factors are also playing clearly against gold. The US monetary policy cycle is turning around, promising to reduce stimulus in the form of balance sheet purchases. More importantly, the Fed is expecting a rate hike in about a year . That's much faster than it has been since the global financial crisis. And it is important to realize that gold and silver fell in 2011 on signals of tightening US policy. Gold barely and briefly managed to rewrite those highs, and never reached them, as rising interest rates bring back the attractiveness of bonds, while precious metals do not yield.

Fears that the Fed's monetary policy will miss inflation and collapse the dollar are also not justified so far. Judging by the markets' reaction, investors perceive the current policy as adequate, willingly switching to buying dollars.

But there is a silver lining in the acceleration of trends compared to gold's previous rise/collapse cycle: with a more compressed cycle of declines and rises, gold may not be as susceptible to an emotional sell-off.

Although right now we continue to see the downtrend as the prevailing trend, traders should pay attention to the dynamics of gold near 1680 in the coming days and weeks. Here, quotes have been receiving meaningful support since last June. This will reverse the entire rise from pre-pandemic levels. In roughly the same way, gold almost completely nullified its growth from the acute phase of the global financial crisis, falling to 1000 in 2015, after which it found long-term support.

So this time, a return under $1700 promises to attract long-term buyers betting on trends beyond pandemic and increased printing press activity, and on long-term economic growth and demand for the metal.

Thus, short-term traders can already start looking at gold for a good entry point on the local . Longer-term traders can also already consider investments in the metal and this sector. For the latter, the question of the balance of risk and potential also becomes relevant. From current levels, the latter is clearly outweighed, so we should not be surprised if gold continues to receive significant support on dips under 1700$ in the coming weeks. It is quite possible that these levels could turn out to be the point of accumulation of long-term investors' positions and prove to be the starting point of a multi-year cycle of rising prices.