Gold Weekly Analysis: Buying Pressure Persists (November:15-19)

Gold prices have been on an impressive run the past few months, climbing from $1,540 at the beginning of September to a high just shy of $1,867 last week.

However, that might be about all people who will get out if higher inflation numbers and geopolitical tensions continue weighing heavily into risk sentiment. It has seen increased expectations for rate hikes in America stimulate demand for precious metals over time despite their reputation as hedges against economic uncertainty or currency devaluation.

This situation has brought fundamentals back into focus as risk sentiment for precious metals evolves in 2017-2018; we can't predict what will happen next, but it seems like things are getting interesting. It is expected gold has chances to test above $1900 or more.

What happened last week?

The 10-year US Treasury bond yield broke below 1.5% last week and lost more than 3%. It allowed gold to push higher at the start of the previous week.

The Federal Reserve's Monetary Policy Committee Members were split over whether to raise interest rates this year or wait until next year. It caused a lot of turmoil within currencies around these parts - which have shown signs lately saying it may be time for economic stimulus again after everything calmed down during QE3 following Lehman Brothers' collapse.

What About The Next Week?

October's Retail Sales data will be released on Tuesday, and it's possible we could see a weaker-than-expected print which would revive concerns over inflation impacting consumer activity negatively. However, an upbeat reading may help risk flows return to markets limiting XAU/USD's upside movement. But gold, as long as above $1800, will be considered as an uptrend market. So, any downside correction may be the chance of buying opportunities.

There are not so much market-moving data to be released in the next week. So, investors and traders will care about inflations, 0-year US Treasury bond yield moves, Retail sales reports, and any comments from FOMC policymakers. I think these four factors are enough to understand the gold market from the view of fundamental analysis.

Technical View:

Technically gold is in an uptrend, and there is no doubt. But gold stuck below the resistance level of $1875. So either we should buy gold after breaking above $1875 or after downward correction nearly $1850 price zone.


H4 Chart

From the present rate, immediate support is identified at the $1850 price zone. The next significant support shows the $1835/1830 price zone. I don't think next week's data are enough to break below the $1830 price zone unless any unexpected things happen.

On the other hand, immediate resistance is identified at the %1870/1875 price zone from the present rate. Breaking above the $1875 price zone will open the door for the $1900/1910 price zone.

I expect the market will ring next week between the $1875 to $ 1830 price zone if the retail sales report prints positive or the $1875 to 1900 price zone if the retail sales report comes negative.