Gold is about to turn up but needs confirmation from Fed

Expert market comment from Alex Kuptsikevich of the FxPro Analyst Team: Gold is about to turn up but needs confirmation from Fed
FxPro | 778 days ago

Gold is about to turn up but needs confirmation from Fed

Gold retreated to $1633 by the start of this month, close to the lows of September and October, but gained about 1% surpassing $1650. We saw a similar buying spree the month before, and such buying activity looks like a reversal to the upside. However, in the current circumstances, it is better to wait for the price to surpass $1700, confirming a bullish reversal.

 

While central banks are signalling one after the other that they are decelerating their rate hikes, gold is enjoying ‘buying the dip’ behaviour, as some investors see the current prices at the bear market's edge (-20% of the peak) as attractive for buying in the mid-to-long term.

 

On the weekly charts, gold trades below its 200-week average, which is often a bearish sign. But experienced traders must have noticed that in 2016 and 2018, the price reached a local bottom about five weeks after falling below that line, just like now.

However, this is a case where waiting seems like a prudent tactic. On the technical analysis side, it is more sensible for medium-term buyers to wait for the price to return to the area above the 200-week average, surpassing $1700.

 

Also, long-term buyers of gold would be better off waiting for official signals from the Fed that it will lower the pace of rate hikes. Despite the reparations by the speakers and the media to soften the call, there is still a risk that it will not happen this coming Wednesday, as the Fed has already surprised many times with its hawkishness over the summer months.

 

Notwithstanding the risks noted above, in our view, the prevailing scenario is still a reversal in gold following a change in the degree of rhetoric. A similar reversal but in a different direction was in March 2022, when the Fed started to "surprise" the markets with increasingly hawkish rhetoric.

 

By the FxPro Analyst Team

Regulation: FCA (UK), CySEC (Cyprus), SCB (The Bahamas), FSCA (South Africa)
read more
ATFX Market Outlook 18th December 2024

ATFX Market Outlook 18th December 2024

U.S. retail sales data exceeded expectations, indicating economic and consumption strength. Next, markets prepared for the Federal Reserve's interest rate decisions. On Tuesday, U.S. stocks fell, with the Dow Jones down for the ninth straight session. The S&P 500 and Nasdaq declined by 0.39% and 0.3%, respectively.
ATFX | 4h 28min ago
Fed and BoJ enter the limelight

Fed and BoJ enter the limelight

Fed expected to cut, attention to fall on the dots - BoJ could stand pat but signal more hikes at the turn of the year - Sticky UK inflation keeps pound supported ahead of BoE - Loonie tumbles on political turbulence and soft CPI data
XM Group | 4h 59min ago
USDJPY rally pauses ahead of key events

USDJPY rally pauses ahead of key events

USDJPY is trading sideways as the yen shows some signs of life; Market participants are preparing for central bank meetings; Momentum indicators are mostly bullish at this stage
XM Group | 6h 23min ago
Daily Global Market Update

Daily Global Market Update

Bitcoin gained slightly, Meta and AUD slipped, Gold dipped due to strong USD. US retail sales strong, crypto.com CEO met Trump on Bitcoin Reserve. Watch Japan data, US Redbook, UK retail sales, Eurozone unemployment, Germany industrial production.
Moneta Markets | 9h 32min ago