The volatile outlook in the gold price eased on Monday as investors sought to gauge the impact of rising Omicron cases and the impact of the US Federal Reserve’s rate hikes on rising inflation. Analysts’ market assessments and forecasts cryptocoin.com compiled for our readers.
According to Ed Moya, gold price will continue to fluctuate
Global stocks slumped amid concerns over the impact of tighter Covid-19 measures, while safe-haven inflows to gold appear to have stalled. Unlike Friday, which seems to have pushed gold prices to their peak since Nov. 26, gold has found little support from the lower dollar. Ed Moya, senior market analyst at OANDA brokerage, comments:
Gold had a good rally and we are now entering that holiday period when traders are no longer fully engaged. You’ll likely find that risk appetite diminishes, with gold doing little to help.
Amid the Omicron headlines, Ed Moya adds that volatility will continue through the end of the year, before a final consolidation above the key $1,800 level in the next month or so.
TD Securities: We can still see modest upside for gold
Although bullion is seen as a hedge against high inflation and uncertainties, interest rate increases increase the opportunity cost of holding non-yielding gold. But analysts think the uncertainty from Omicron could help gold by leading to a more dovish central bank narrative in 2022. In a note, TD Securities highlights:
We may still see a modest upside for the precious metals as the bearish slant listing indicates the metal may be more susceptible to emerging doubts about the Fed’s ability to meet its hawkish stance.
“Fed news not optimistic for precious metals”
According to market analyst Todd Horwitz, Gold Bugs want to know if bottoms are in, they never think the yellow metal will drop. The analyst states that the action of the FED announcement last week was solid, but not enough to reverse the downtrend.
“Silver is very similar to gold, while platinum continues to struggle,” said the analyst, adding that Fed news is not optimistic for metals, however, the news may already be priced in, leaving a short-term rally. According to the analyst, this week could go a long way in determining whether bottoms are in, but it’s a short holiday week and the action may be weak. The analyst points out the following technical levels:
There is a key level that is much lower at $1,450 that could come into play. However, we do not make such calls. This is just a graphic point. Looking at the real world in the near term, 1.760 followed by 1.720 are key downside levels for gold. 1.820 will be a level where a reversal can occur.
“We’re open and will consider selling more outside of the holiday shortened week,” says Todd Horwitz. According to the analyst, the percentage of trades and wins is 66% and the pattern indicates that the signal and the action are trending downwards. After stating that in all markets, price action determines what will happen in the next day, week or month, the analyst says:
Keep the two strategies separate. The worst trade anyone can make is to turn a trade into an investment in hopes of a way out. Traders must learn to take their losses and move on to the next trade. Patience, discipline and money management always wins the day. Let the map of the markets show you the way.
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