RLinda ! GOLD-> Medium-term perspective. Long or short?

15 בנוב׳ 2022

Gold prices rose to a three-month high of $1785, supported by a weaker dollar amid hopes that the Fed will take a less aggressive approach to raising rates in the future. Gold has had a very strong rally from $1618 and should consolidate a bit in the short term now. However, the overall risk remains very high.


(Chart 1. Price correlation between DXY, US Bonds, XAUUSD from the opening session on Monday until now)

• DXY has risen to 107.2 since Monday, the correction is over and the fall has continued to almost $106, renewing the local low
  
• The U.S. government bond is down 2.2% since Monday
  [Gold makes a new three-month high at 1785 and a correction is underway. The overall gain since Monday is almost 1.3%.
  
• The SPDR Gold Trust, the world's largest gold exchange-traded fund, reported that its holdings rose 0.03% to 910.41 tons Monday from 910.12 tons Friday.
  
• Speculators reduced net short positions by 30,659 contracts to 8,219 on COMEX gold in the week to Nov. 8
  
• Global stock indexes fell Monday and U.S. bond yields rose as investors assessed comments from Federal Reserve officials trying to determine the central bank's path forward on raising rates.
  

(Chart 2. Daily chart of gold. Visual indicator of the rise from the November low)

Gold prices have risen more than $160 since falling to a low of 1,618 earlier this month. Data on the rise in the U.S. unemployment rate in October and signs of easing inflation have sparked optimism about a slowdown in Fed policy.

Traders now rate the odds of a 50-basis-point rate hike higher than a 75-point hike at the U.S. central bank's December meeting. Although gold is considered a hedge against inflation, rising interest rates tend to make bullion less attractive because the metal does not pay interest.


(Chart 3. Daily chart of gold with overlaid indicators. Technical Analysis)

Gold Price Outlook:

• Gold prices are making gains amid declining real yields in the U.S. However, until gold prices break the downtrend from the highs of March and August, it is too early to talk about the medium-term outlook.
  
• Gold prices are bullish in the near term, according to the Market Sentiment Index.
  
• An unexpected decline in U.S. inflation in October helped gold prices reach their highest level since mid-August.
  
• Globally, gold is bumping up against downtrend resistance, I think it's worth pushing back from that
  

Technical indicators:
The weekly chart shows us the fact that the price is still in a downtrend but is testing resistance amid distributive growth, also last week the price is breaking through a strong trend line and essentially is currently sandwiched between the trend line from 2018 and the price channel resistance. I tend to think that price could go into consolidation or a technical pullback after the distribution and go down to the 1726 zone, but with force majeure and a breakdown of the channel resistance there is potential for a rise to 1878

• The price is under the pressure of the daily MA-200 and also the moving average coincides with the nearest strong resistance of 1807.96, to which the price can react with a pullback. I think this resistance level is the nearest key target
  
• The daily MA-50 is still supporting the price, forming a curve indicating a bullish trend.
  
• The daily RSI is entering the oversold area and may indicate a bearish signal in the near term, which will trigger many active traders
  
• The daily MACD is in a bullish outlook, with both lines (MACD line and signal line) indicating a bullish trend, which coincides with the mood of the chart.
  

Key targets:

• Long positions - resistance 1807.96
  

On a pullback:

• First target - support 1765
  Second target - support 1726.
  

Regards R. Linda!