According to market analyst Anil Panchal, gold price is struggling to recover from the heaviest daily losses in a week and is testing short-term key support. Meanwhile, Covid-19 variant Omicron woes are escalating and Fed rate hike concerns are mounting, but the end-of-year holiday mood restrains market movements.
“An early interest rate hike by the Fed, which is on the table, puts pressure on gold”
Anil Panchal notes that gold is consolidating the corrective retracement from its one-month high so far at $1,820, in Asian trading this Wednesday. The bright metal sits just under $1,800 as it broadly undermines a stronger US dollar in a cautious market mood. According to the analyst, rising Covid cases globally remain a cause for concern, while trading weakened by the holiday exacerbates the market’s pain, increasing the dollar’s safe-haven appeal. However, the analyst says losses are limited by weak Treasury yields and rising inflation expectations.
Focus now shifts to US Trade data and Pending Home Sales for new trade incentives as Omicron concerns and Fed sentiment continue to impact dollar and gold valuations heading into the New Year. Cryptocon. com
As we reported , the yellow metal reversed gains near its multi-day top, taking cues from the market’s indecision about the Fed’s next moves and worsening coronavirus conditions. Weak year-end liquidity conditions are pushing the bears, even as technical signals point to the yellow metal’s further downside, according to the analyst. In addition, the analyst makes the following assessment regarding inflation expectations and the Fed’s stance:
Inflation expectations in the US, St. Louis Central Bank’s 10-Year Breakeven Inflation Rate is close to its monthly high, which keeps hopes of an early interest rate hike from the Fed on the table and increases the pressure on gold prices.
Given the mixed markets and the holiday mood, the analyst sees gold traders likely to remain stagnant. However, the latest rising wedge confirmation is challenging the previous bullish consolidation. Therefore, the US Pending Home Sales and Merchandise Trade Balance and risk catalysts for November are important to watch for new momentum.
Gold price technical analysis: There are signs of gold weakness
Market analyst Anil Panchal states that the price of gold confirmed a bullish wedge bearish chart pattern in the four-hour game the previous day, but the 200-SMA level near $1,805 is probing sellers.
However, bearish MACD signals and the descending RSI line point to even weaker gold. However, the price’s further declines above $1,805 are triggering a theoretical drop towards the October low of $1,746. Still, the latest bottom and monthly bottom near $1,784 and $1,753 respectively will challenge the metal’s further weakness.
Alternatively, he states that gold buyers should hold the reins above $1,810 to reject the latest bearish chart pattern confirmation. Following that, the latest level near the November-December downside $1,820, and the 61.8% Fibonacci retracement level, around $1,830, will catch the market’s attention.