Gold about to get the Midas touch?

All of you regular readers will know that I am massively bullish on gold and am something of a gold bug. But I try not to let that cloud my views on the precious metal in the short-term (for the long-term just buy a gold miners ETF or something :) ). 

I'm watching the charts, and gold has been on something of a breakout in the last week - firstly getting a bit of a lift from the Fed and then a bigger lift from payrolls (man... that was a difficult payrolls report to digest - who would've thought payrolls is now a supply side indicator - hit me up with questions on this... happy to try and explain). We're approaching key levels now... and I've got my eyes firmly on USD1835/oz. This is the top of the range which we've been in for almost 6 months now! 

Source: cTrader FXPro

You can see I've marked up a couple of things on the chart... firstly the 1835 top of range - see how far back that goes! A break above this level would be pretty key. Also on the chart, the green box shows the top of the trend line which slopes down from the all-time highs. This is a bit of a tricky trend line to pin down, but a significant break above would serve as momentum for a move higher. It's nice to also see volumes actually ticking up slightly too. 

Source: St Louis Fed - FRED

This piece is mainly focussed on the technicals and the possibility of a breakout, but I wanted to draw attention to this particular chart since it shows the correlation between gold and breakeven yields over time - clearly there is a strong negative correlation here. Higher breakeven rates lead to lower gold and vice versa. 

But what's noticeable is that these breakevens are now getting close to new lows, and gold hasn't really responded to move a lot higher. Breakeven rates are around where they were when gold was at all-time highs but now gold is about USD300 lower. 

What this implies for me is that there is strong fundamental background for gold to take a leg higher too. The Fed has re-affirmed its dovishness and market pricing for hikes has been pushed back pretty significantly. I'm now increasingly confident that when we have both dovishness from the Fed and rising inflation... we will see higher gold. 

So, any break above USD1835, look to get long, I'd have an initial price target in mind of around USD1960/oz, but I've said a couple of times to people I expect new ATH in 22, and I stand by that belief. 

Happy Trading to All.