Gold deepened its decline on Tuesday, amid risk appetite fueled by hopes for peace on the Russia-Ukraine front, and fell below $1,920 at the time of writing, with an intraday loss of 1.62%. However, DBS Bank analysts see the current decline for gold prices as a correction and state that the bullish trend remains intact.
Is the drop in gold prices a correction?
Gold gave up on the gains of its recent rally to hit $2,070 high. However, DBS Bank analyst Benjamin Wong, who remains bullish as the yellow metal continues to trade above the $1,850/16 area, considers the current drop as a correction. The analyst expects a short-term head-and-shoulders drop in the precious metal to $1,906 as the bears’ top target. Benjamin Wong draws attention to the following points in his technical analysis:
On the weekly chart, gold’s natural bullish trend remains intact given the moving average convergence divergence (MACD) signal remains higher. However, a monitoring vigil continues. Highs of $2,075/70 could turn into double tops if price corrosion is not brought under control.
Gold prices will continue to rise, according to DBS Bank
For now, at least from a weekly price perspective, he predicts that gold will continue to rise as it holds the $1,850/16 price zone. The first marks a drop from $1,992 to $1,850; the former pits a neckline breakout and the latter is home to a crucial moving average level of $1,816. Benjamin Wong points to the following levels for gold prices in his technical analysis:
The move lower from $2,070 is now molding a potential near a head-to-shoulder top. This provides the ground for either movement towards a 61.8% retracement of the grip in the recent $2,070-1,780 range measured at $1,891 or corrective action towards the head-and-shoulder pattern target calibrated at $1,906.
Moreover cryptocoin.com As a reminder, beyond technical analysis, all eyes are on the Fed and US central bank Governor Jerome Powell this Wednesday. Markets will look for clues as to how the Fed is assessing the war in Ukraine and whether the invasion and sanctions will affect the outlook for rate hikes for the rest of the year, though pricing in a 25bp increase. As it is known, high interest rates put pressure on prices by increasing the opportunity cost of holding non-yielding bullion.
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