XAUUSD, Daily
The price of Gold remains below its key level $1800 today, however it is generally performing better than the metals market and is currently at $1783. Optimism that China’s economy will reopen and growing concerns about a global recession have prompted safe-haven market participants to pull back on the yellow metal. China said this week that it would continue to ease its restrictions on COVID, boosting hopes for a fast economic recovery in the country, despite a record increase in daily infections.
Gold prices rose Wednesday by $14.96 (+0.84%) to $1,785.75, following increasing warnings that rising interest rates and persistent inflation would lead to a 2023 recession in the United States. In addition, the US yield curve is inverted, which is a warning sign of an impending recession for many market participants. (see below)
It is worth noting that Gold has significantly lost its safe haven status to the Dollar over the course of the year, although speculation that the Greenback has peaked has led to recent capital flows into the yellow metal.
Tomorrow, all eyes will be on US inflation figures for November, which measure the evolution of price pressure, despite a decline in October (6.7%), which remains well above the Federal Reserve’s target. It should also be noted that the dynamism of household consumption and the labor market reinforces the fear that inflation will continue and become more pronounced in the coming months.
Such a scenario could prompt the Fed to take more aggressive measures. While the central bank is considering a more moderate rate hike next week (50 bp), higher than expected by markets participants could lead to a more hawkish outlook from the Fed and further dent the yellow metal.
Technical Analysis, Daily
The price of Gold is currently above its cloud, its KIJUN (Lv) and Tenkan (Lj) at $1,783; the lagging span (Lb) is above its peers and the cloud clearly signifying a bullish momentum, which means the price could reach $1,788.3 and then $1,805.8. On the other hand, if the price starts to fall again, it could reach $1,762 and then around $1,748.2.
In conclusion It would seem that the yellow metal could finally break the key resistance of $1,800 but it is important not to forget in its analysis that the slowdown in economic growth in the rest of the world could also weigh on the demand for Gold.
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Kader Djellouli
Market Analyst
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