cryptocoin.com As we reported, gold prices edged higher on Thursday as demand for the safe-haven asset rose on a weaker dollar and data showed the US economy was growing at its slowest pace in more than a year. At the time of writing, spot gold fell 0.19% to $1,795.63 while US gold futures were trading at $1,796.6, down 0.32%.
“We see both gold and silver prices rising in the coming weeks”
According to David Meger, director of metals trading at High Ridge Futures, economic growth in the US has slowed, which will bolster the gold market from the perspective that the Federal Reserve is unlikely to cut asset purchases any faster or the outlook for higher interest rates will be restrained.
U.S. gross domestic product rose 2.0% last quarter, below expectations of 2.7% year-on-year, as a resurgence in COVID-19 cases has further strained global supply chains and led to shortages of goods such as cars that curb consumer spending. DXY, on the other hand, was badly affected by these data, falling 0.6% on Thursday to hit a one-month low. However, today there was a 0.16% recovery in DXY, albeit partial. Referring to inflation pressures, David Meger makes the following assessment for gold:
The fact that gold is seen as one of the most important hedges against inflationary pressures is an underlying supporting factor for bullion market progress, and we see both gold and silver prices rising in the coming weeks.
The European Central Bank did not change its policy on Thursday, as expected. Markets are currently focused on the US Federal Reserve’s November 2-3 meeting. This will be even more important for gold after Chairman Jerome Powell’s recent statements about reducing asset purchases. StoneX analyst Rhona O’Connell comments:
It is inevitable that there will be a short-term reaction to the Fed’s statement next Wednesday in line with expectations.
Technical analysis: The market turned and formed a shooting star
According to market analyst Christopher Lewis, gold markets initially rallied during Thursday’s trading session, but entered a major downtrend line. The analyst states that the market is spinning and forming a shooting star, and that there is a nice hammer in front of the shooting star, which indicates that the market will continue to fluctuate a lot back and forth in this general environment. Christopher Lewis continues his analysis:
This shouldn’t come as a big surprise as the 200-day EMA also sits here. Between this and the downtrend line there is the 50-day EMA, which also offers support. So frankly I think gold is stuck right now and therefore it’s only a matter of time before it makes an explosive move. But it’s not quite ready to do that yet.
The analyst predicts that if the price of gold can break above the highs of the last few days, it will likely head towards the $1,835 level, and breaking above this level will open the possibility of further higher highs. According to the analyst, in this case, it may perhaps present a bit of a “buy and hold” situation. The analyst points to the following technical levels:
On the other hand, if it reverses a break below the 50-day EMA, then the market is likely to look much lower, perhaps towards the $1,750 level. At this point, the $1,700 level can be targeted and at the same time, it is necessary to assume that we will see a major reversal in the US dollar. It looks like it’s ready to make a bigger move right now. It’s just necessary to let the market make this move before putting the money to work.
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