Gold prices remained neutral again as hedge funds sought a new catalyst as the November rally slackened, according to the latest trading data from the Commodity Futures Trading Commission (CFTC). The yellow metal will post a sustained rally above $1,800 in the second half of 2023, according to TDS.
“Gold has exhausted its recovery power”
Gold prices are flooding above $1,750 after nearly three weeks of short squeeze failed to push prices above $1,800. Gold futures for February were last traded at $1,766.20, up 0.62% on the day.
Meanwhile, the markets began to change their expectations regarding the US monetary policy. Also, markets expect the Federal Reserve to slow the pace of aggressive rate hikes. As a result of these developments, precious metal prices saw a sharp rise at the beginning of November. However, analysts state that the initial acceleration continues its normal course. John Reade, chief market strategist at the World Gold Council, comments:
Gold is trading around $1,755 this morning with a buy-sell spread of $0.30. The recovery, which took gold just below $1,800, has exhausted its strength with gold, which is currently between the 100 and 200-day MA. The RSI at 60 is also neutral.
“The message from the Fed is that rates will stay higher for longer”
Some analysts point out that rising interest rates still keep many investors on the sidelines. cryptocoin.com As you can follow, the Fed gave a signal to slow down the pace of rate hikes at the start of the new year. However, markets are still predicting interest rates to rise above 5%. Nicholas Frappell, global general manager of ABC Bullion, comments:
The message from the Fed is that rates will stay higher for longer. This will also help the dollar. The yellow metal appears to be rallying on a slower track towards the highs and longs.
The gold market is currently net long with 19,431 contracts.
The lack of bullish belief in the gold market continues to be reflected in the trading data from the CFTC. The CFTC’s disaggregated Commitments of Traders report for the week ended November 22 showed that money managers reduced their speculative gross long positions in Comex gold futures to 92,161 with 2,904 contracts. At the same time, short positions increased by 3,122 contracts to 69,608.
The gold market is currently net long with 19,431 contracts. This shows that it has remained relatively unchanged compared to the previous week. Hedge funds purchased a total of 5 million ounces of gold to cover their short positions. Therefore, the drop in momentum contrasts sharply with the previous two weeks. During the survey period, bullion prices managed to hold solid support above $1,750, which analysts say has become an important initial support.
“There is still a long way to go before the gold shines continuously”
Glossy metal has had a disappointing performance this year. The yellow metal dropped from its high of just over $2,050 in March to $1,617 in early November. TD Securities economists expect the shiny metal to drop below $1,600 in the coming months. In this context, economists make the following assessment:
Despite the recent rally, we expect the sharp rise in US real and nominal rates along the short end of the curve to push gold to $1,575 in the first quarter of 2023. The yellow metal is likely to start rising above $1,800 after the first quarter as it becomes clear that the Fed is nearing the end of its tightening cycle and the market begins to look for discounts on the horizon.
