Gold futures shine bright with a strong gain, forming a "3 river morning star"

Gold futures rebounded strongly after last week's price pullback. As of 4:55 PM ET, gold futures for the June 2024 contract surged $27.10, settling at $2,361.80. With the June contract nearing its first notice day, the August 2024 gold futures contract will soon become the most actively traded. Currently, the August 2024 contract is up $27.40, trading at $2,384.30.

Multiple factors have been driving gold's ascent to record highs. While some analysts attribute the precious metal's rally to dollar weakness and declining U.S. Treasury yields, our analysis suggests that geopolitical and macroeconomic influences have played a more significant role.

Ongoing military conflicts in the Middle East and the Russia-Ukraine war continue to fuel geopolitical uncertainty, bolstering gold's safe-haven appeal. Additionally, central banks worldwide have been steadily increasing their gold holdings over the past two years, with China's central bank among the most aggressive buyers.

China's consumer demand has also been a major catalyst for gold's recent surge. According to UBS, "A significant driver of the surge in gold prices has been the robust increase in China's gold demand, particularly evident in the first quarter of 2024. Chinese consumers have demonstrated an unprecedented appetite for gold jewelry, with purchases reaching record levels. This surge in demand from China has significantly contributed to the upward trajectory of gold prices and is expected to continue supporting prices in the near term."

Gold investors and traders have remained active buyers on price dips, supporting the precious metal's pricing at these new highs.

On the daily chart, a simple Japanese candlestick pattern called a "Three River Morning Star" has emerged. This pattern, formed after a price decline, can be a strong indication of a key reversal from bearish to bullish.

The pattern consists of a large red candlestick within a defined downtrend, followed by a small-bodied candle (either red or green) that opens and closes below the first red candle. The final candle is a large green candle that opens above the middle candle and closes above the center of the body of the first candle.

With gold's recent strength and the formation of this bullish reversal pattern, the precious metal's upward momentum could continue to shine in the coming sessions.

Wishing you as always good trading,

Gary S. Wagner