A strong dollar and high Treasury yields are limiting gold’s rise. The Fed’s cautious interest rate reduction approach puts pressure on gold prices. Gold liquidation by large speculators indicates that prices will fall further. However, TD Securities strategists are bullish in the longer term.
TDS: Gold will rise in 2024!
Already facing downward pressure, gold prices lack significant bullish catalysts. This indicates that prices will potentially be limited in the near term. The combination of a strong US dollar, rising Treasury yields and Federal Reserve policies is creating a challenging environment for gold’s upside. However, TD Securities strategists are bullish in the longer term. According to strategists, interest rates will likely fall before the inflation target is reached. In this context, strategists make the following comment:
The US Federal Reserve’s next move will be a reduction. Now markets will have to decide when this will start. As interest rates will likely fall before the inflation target is reached, and given the strong central bank purchases, new demand and relatively short positioning lead us to say that positions and prices will increase in 2024.
Bullish drivers are missing in the short term
The absence of strong drivers for the yellow metal’s rally is evident. Although there has historically been an inverse relationship between gold prices and the US dollar, the strength of the dollar, especially after a positive employment report, reduces the attractiveness of gold. Additionally, the rise in Treasury yields, a reflection of investor sentiment regarding economic resilience, is shifting attention away from gold as a safe haven.
cryptokoin.comAs you follow from , the Federal Reserve kept interest rates constant at the last meeting. However, Chairman Jerome Powell maintained a hawkish outlook. This reduces the possibility of significant interest rate cuts. This scenario deals a blow to the appeal of gold, which thrives in low-interest-rate environments. In particular, data shows that money managers and major speculators are reducing their long positions in gold futures. This indicates a change in market sentiment. If this liquidation trend continues, it could lead to a breakout of key support levels for gold prices.
Gold prices short-term outlook: Technicals point south
Market analyst James Hyerczyk looks at the short-term market outlook and technical picture for gold. In the absence of positive catalysts and increasing negative factors, the gold market may face further difficulties. If current trends continue, we will likely witness a more significant decline in gold prices, especially with the liquidation of major market players. In this case, a test of lower support areas around $1,965.00 to $1,950.00 is potentially possible. Upcoming economic reports, especially those related to inflation, will be crucial in shaping gold’s near-term direction.
Gold fell on Monday after breaking above the weak side of the 50-day moving average at $2,033.27. This indicates a slight downward shift in the momentum of the intermediate trend. While the market has been navigating this moving average for two weeks now, it has all the makings of a pivot. A sustained move below the 50-day MA will indicate the presence of sellers. If this creates enough downside momentum, it is possible for it to test the static support at $2,009.00. This would be the trigger point for an acceleration towards the 200-day moving average at $1,965.48.
However, regaining the 50-day MA will bring some buoyancy to the gold market. But until it overcomes the static resistance at $2,067.00, it will likely remain in the range. The daily chart shows the path of least resistance down based on the distance between the current price at $2,030.15 and long-term support at $1,965.48.
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