Market Analytics and Considerations
Key notes
Technical Synopsis
On Monday, there is no clear bias in any way for the price of gold, which is restricted to a narrow area. A slight decline in the USD provides some support, but the upside is constrained by a number of variables.
Given that it closed the prior week above the crucial 200-Daily Moving Average (DMA) at $1,786 the gold price is now beginning to show signs of life. Nevertheless, a bullish 14-day Relative Strength Index suggests that buyers may try to increase their position (RSI). The RSI, which is presently at 57.98, is edging up just above centerline.
On the other hand, any swing trades might be constrained by the 200DMA resistance-modified support. A daily close just below 200DMA could place the upward 21DMA at $1,775 and bullish commitments there in jeopardy. The continued upward trend will be reversed by a clear closing just below 21DMA support.
Daily – SMA
|
Name |
MA5 |
MA10 |
MA20 |
|
MA50 |
MA100 |
MA200 |
|
Gold |
1802.59 |
1804.09 |
1788.16 |
|
1729.26 |
1726.06 |
1786.91 |
Fundamental Structure
On the opening day of a new week, the price of gold fails to build on Friday’s somewhat positive recovery from a more than one-week low and trades in a constrained band. The XAU/USD, on the other hand, remains able to keep its stance above the 200-day SMA, while it continues to trade under $1,800 in the early European period
The US Dollar experiences some fresh decline in value and ends up being a significant factor supporting the price of gold that is priced in dollars. However, given a little uptick in US Treasury bond yields and the Federal Reserve’s (Fed) past week’s more aggressive remarks, the USD’s fall is expected to stay constrained.
In reality, the US central bank stated that it will keep raising interest rates to control inflation and predicted that by the end of 2023, borrowing prices would have increased by at by another 75 basis points. The US bond rates benefit from this, which caps the price of quasi gold along with the likelihood of additional tightening by other significant central banks.
It is important to remember that the last Thursday, the European Central Bank (ECB) adopted a hawkish stance and said that additional interest rate increases were essential to confront persistently high inflation. In its battle against by the ongoing increase in consumer prices, the Bank of England (BoE) provided a similar message and indicated that additional rate increases were expected.
In addition, traders are said to be deterred from putting bullish wagers on the safe-haven currency pair XAU/USD by the sustained growth of the equities markets. To be sure, rising concerns of a deepening global economic crisis should temper market confidence and continue to boost the price of gold, at least for the time being.
Given the lack of any significant market-moving economic announcements, the muddled fundamental environment promotes the possibility of the restrained price movement extending. Investors may also decide to stay out of the market until the US Core PCE Price Index, the Fed’s favored inflation indicator, is released in the week.
