Gold fails to build upward momentum - key areas to watch
Gold fell on Friday to record a 2 week low and Monday it has failed to sustain any significant upward momentum. The dip has come after Gold recently hit a 9 month high. The precious metal continues to trade at levels at around PRICE
Resistance remains strong at $1848. After that bulls will target the multi-month high at $1877. This was last touched on Tuesday. Meanwhile, $1834 has been a strong support and it remains to be seen if gold will be able to hold this level. A collapse could see price head down to levels near $1810 and then bears will be targeting a fall to the psychologically significant $1800 figure.
The term ‘inflation hedge’ has gained further relevance recently with the US printing a 3 decade high inflation figure. Gold has lagged behind equities this year, but analysts will be looking at whether it could be set for a run up with a risk-off sentiment. Austria has entered a full lockdown and many countries in Europe are battling rising Covid-19 cases. Further lockdowns could increase the inflation hedge case for gold.
Meanwhile, the dollar has shown strength which has helped to cap any gold gains. Hawkish noises from the Fed along with rising yield bonds have given it a boost in recent days.
Wednesday will be key for short-term Gold price. We will receive FOMC minutes and other data releases from the US that will influence both the dollar and gold. Will the Fed take action earlier than expected to curb inflation? So far, it seems that the market is pricing in a rate hike.
Resistance remains strong at $1848. After that bulls will target the multi-month high at $1877. This was last touched on Tuesday. Meanwhile, $1834 has been a strong support and it remains to be seen if gold will be able to hold this level. A collapse could see price head down to levels near $1810 and then bears will be targeting a fall to the psychologically significant $1800 figure.
The term ‘inflation hedge’ has gained further relevance recently with the US printing a 3 decade high inflation figure. Gold has lagged behind equities this year, but analysts will be looking at whether it could be set for a run up with a risk-off sentiment. Austria has entered a full lockdown and many countries in Europe are battling rising Covid-19 cases. Further lockdowns could increase the inflation hedge case for gold.
Meanwhile, the dollar has shown strength which has helped to cap any gold gains. Hawkish noises from the Fed along with rising yield bonds have given it a boost in recent days.
Wednesday will be key for short-term Gold price. We will receive FOMC minutes and other data releases from the US that will influence both the dollar and gold. Will the Fed take action earlier than expected to curb inflation? So far, it seems that the market is pricing in a rate hike.
Comment:
We see that the bearish pressure has increased and price has broken below $1800. Bulls will need a significant rebound from here or we could see a larger correction in the coming days and weeks.