Gold price remains at $1,750. But analysts say the precious metal desperately needs a new catalyst to push prices up. Therefore, they warn traders not to expect a breakout move anytime soon.
“Gold’s rally is largely due to short closing”
According to commodity analysts, the Federal Reserve’s aggressive monetary policy stance remains the most important driver for the gold market. The Fed gave signs that it could slow the pace of rate hikes in December. However, investors remain reluctant to jump into the market.
ABC Bullion global chief executive Nicholas Frappell says gold’s rally since the start of the month is largely due to investors buying gold to close their short positions. He adds that investors do not buy gold-backed products traded in the stock market. Therefore, he says any bullish momentum is unlikely to continue in the current environment. In this context, the analyst makes the following statement:
New buyers are not motivated in either the Futures or ETF space. Also, the message from the Fed is that rates will stay higher for longer. This will help the dollar and interest rates. Gold appears to be recovering more slowly on a long, high road.
“Powell’s hawk comments put pressure on gold price”
Markets will hear from Federal Reserve Chairman Jerome Powell himself as he speaks at an event at the Brookings Institution in Washington DC next week. Markets expect the Fed to cut interest rates to 50 bps next month. However, some analysts say that it is still too early for any turning point signals in the market. Commodities analysts at TD Securities expect Powell’s hawkish comments to weigh on gold as it continues its upside momentum. They explain their views as follows:
We’ve seen purchase fatigue in a few major global assets. With that in mind, the macro headwinds for the golden bears already seem to be easing. In particular, Powell’s speech on Wednesday is likely to provide the hawkish catalyst needed to keep CTAs selling. When we take this into account, it indicates that the risk of prolonging the bitter trade for gold has decreased.
“It is possible that this will push gold back above $1,800”
Along with Powell’s comments, there is a more intense economic data schedule next week. This is expected to add volatility to the market. Economists say next week’s jobs data will likely affect market expectations about the Fed’s monetary policy. cryptocoin.comIn his latest comments, Powell said the jobs market is very tight and the Fed should see more slack before it starts pulling back on its aggressive stance.
According to consensus estimates, economists estimate that around 200,000 jobs were created in November. “The odds are that job gains are still too high for the moderation we’re looking for,” says CIBC senior economist Avery Shenfeld. With the economic data, gold investors will continue to watch the dollar closely. Carley Garner, co-founder of brokerage firm DeCarley Trading, comments:
The US dollar index tested critical support around 106 points. Any weakness in the US dollar is likely to push gold prices back above $1,800.
Weekly gold price technical analysis
Technical analyst Christopher Lewis shares the following analysis of the technical outlook for gold. Gold fell significantly during the trading week. However, it then turned to create a hammer. The interesting thing is that we saw a complete reversal and the trendline took hold. Ultimately, I think he’s faced with a situation where he’s trying to go back and get out. But the previous weekly candlestick needs to top off. After that, it will deal with the $1,800 level. However, it seems that gold is trying to change its general trend.
It’s possible that a falling US dollar might help. The truth is that both the US dollar and gold are also likely to rise at the same time. Because this correlation breaks down from time to time. Ultimately, if it can break above the $1,800 level, it is likely to send the market towards the $2,000 level. On the other hand, if it turns back below the bottom of the candlestick, it opens the door for a drop to the $1,680 level.
All things being equal, there is a situation where he is about to somehow make a bigger move. That’s why the next week or two is so important. Ultimately, this is something that should get a big signal soon, one way or another. So observing which direction it breaks will open for maybe at least $50, maybe even more than that. Pay attention to interest rates. Because if they drop fast, that’s probably reason enough for gold to rise. However, if there is a sudden anxiety and a flight to safety, it is possible that this will also boost this market.
