Complacency in Gold May Be Hiding the Next Big Move
Chunk of gold in a gloved hand by RHJPhotoandilust___ via Shutterstock Weekly gold has broken above a multi-week congestion pattern, giving the bulls their first meaningful sign of life in some time. The market has spent much of 2026 trending lower from its January high, with the 20-week simple moving average now declining just overhead.…
Chunk of gold in a gloved hand by RHJPhotoandilust___ via Shutterstock
Weekly gold has broken above a multi-week congestion pattern, giving the bulls their first meaningful sign of life in some time. The market has spent much of 2026 trending lower from its January high, with the 20-week simple moving average now declining just overhead. That leaves gold at an important technical crossroads: Is this the beginning of a larger recovery, or simply the relief rally bulls have been waiting for within an established downtrend?
The latest employment report showed weaker-than-expected hiring, reducing market expectations for a Federal Reserve rate hike in September and helping gold reach a seven-week high. Attention now turns to this week’s CPI and PPI reports. Cooler-than-expected inflation readings could further weaken the case for higher rates and provide additional fuel for gold’s advance. Although progress toward a temporary truce with Iran has reduced some immediate geopolitical anxiety, conditions across the Middle East remain unsettled. Recent attacks in the region are a reminder that renewed escalation—and another flight toward safe-haven assets—cannot be ruled out.
More News from Barchart
Technical Picture
Source: Barchart
Gold’s bull run from the 2022 lows culminated in early 2026. During the upmove, the 20-week simple moving average (SMA) contained all of the corrections. Since peaking in early 2026, gold prices have traded decisively below the 20-week SMA. The recent 7-week breakout from congestion has bullish characteristics if prices can hold that top of the congestion area (green box) on a retest. The challenge for higher prices will be the down-sloping 20-SMA. This will be the first retest since the SMA has been trending lower—usually, a significant technical level. The bulls face a challenge if they want this price action to turn into a weekly uptrend.
Seasonal Pattern
Source: Moore Research Center, Inc. (MRCI)
MRCI research reveals that over the past 15 years, the historical price action (blue line) has typically traded in a basing pattern in July, followed by a significant up move that accounts for a large portion of its yearly range. Can gold do it again this year? Given the extended move lower in gold, we could at least see an oversold market condition, which could lead to a price rally. The fundamentals are beginning to align to support a price rally, as gold found support at the $ 4,000-per-ounce level. From a sentiment standpoint, there didn’t seem to be much media coverage of this move in gold. Could that be bullish for prices?
It’s times like these, when the fundamentals are unclear, that having reliable historical research available can help us plan for an upcoming trade with an edge, not just a hunch. MRCI research on the December gold futures contract has identified a pattern that has led to 12 winning years over the past 15, with an 80% occurrence rate. During this period, they conducted hypothetical backtesting and identified an optimal seasonal buy window. The optimal window shows that December gold prices closed higher on approximately August 29 than on August 14. During the testing period, one standard-size December gold futures contract averaged a net profit of $2,904.67.
Source: MRCI
The table above illustrates the results of a 15-year hypothetical test of the December gold futures contract. The column of interest would be the “Worst Equity Amount”. The value of this is that a trader knows the maximum drawdown for each trade during the optimal buy window. For the December gold futures seasonal pattern, 4 of 15 years did not have a daily closing drawdown.
As a crucial reminder, while seasonal patterns can provide valuable insights, they should not be the basis for trading decisions. Traders must consider technical and fundamental indicators, risk management strategies, and market conditions to make informed, balanced trading decisions.
Assets to Trade the Gold Market
In the past, futures traders could participate in these moves using the standard-size contract (GC) or the micro-size (GR) contract, and equity traders could use the exchange-traded fund (ETF) symbol (GLD). Options contracts on the ETF or the Futures contract could also be used. Additionally, investors could purchase physical gold in the spot market.
While the GR contract is more affordable than the GC for many traders, there has still been significant demand for a smaller gold contract from the retail trading base. To address this request, CME Group launched a 1-ounce gold futures contract, GS, for retail clients.
Specifications for the new gold contract are:
Contract Size: 1 ounce
Pricing: U.S. dollars and cents per ounce
Tick size: $0.25 (note the GC and GR contracts are $0.10)
Trading symbol: 1OZ (Barchart symbol GS)
Expiration months: Feb, Apr, Jun, Aug, Oct, & Dec
Settlement method: Cash settled
The features of the 1OZ contract enable traders to track gold prices more accurately. The 1OZ futures are directly tied to the spot price, offering accurate market exposure.
In Closing…
Gold’s breakout from its recent congestion offers traders an opportunity, particularly if softer inflation data and renewed geopolitical concerns continue to support the market. Still, this is no place for complacency. The declining 20-week moving average represents a significant layer of technical resistance, and the market must prove it can overcome that barrier before the rally can be viewed as something more than a rebound within the broader downtrend.
Traders should let price action confirm the next move rather than anticipate it. A decisive close above resistance could attract additional buying and open the door to higher prices, while a rejection would warn that sellers remain in control. The opportunity is there, but patience, disciplined risk management, and respect for the overhead resistance will be essential.
On the date of publication, Don Dawson did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behavior or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional
Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes.The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
