Veteran analyst Christopher Lewis states that gold markets have deteriorated significantly throughout the week to look at the $1,890 level before jumping, and shares his predictions for the yellow metal’s course. Christopher Lewis’ technical analysis in his own words cryptocoin.com We have prepared for our readers.
“Except for this case, gold will continue to be quite attractive”
Gold markets fell pretty hard to hit the $1,890 level before jumping a bit during the trading week. At this point, the market seems to be trying to fight the shooting star and potential “double top” that formed last week. However, at this point, I think we are looking at this as a difficult market to trade, and at this point we seem to be trying to get back to the $2,000 level.
If we break below the candlestick floor and perhaps more importantly below the $1,880 level, that would be a bit of a problem. At this point though, we’re trying to create some space to understand where we’re going next due to momentum or some sort of event/announcement. After all, this is a market that will act in accordance with the US dollar and inflation. In other words, this is going to be a very noisy market causing a lot of headaches if you are not careful with your position size. However, this is a market that will eventually try to reach highs again. However, if we break below the $1,880 level, then we may be looking at the 50-Week EMA.
In this scenario of weakness, it would likely have to do with too much US dollar strength and perhaps some sort of peace deal being signed between the Ukrainian and Russian governments. Except for then, I think gold will continue to be quite attractive.
Rising rates make yellow metal less attractive
Central banks are accelerating along with high inflation spreading all over the world with the increase of geopolitical risks in Europe. Last week, the Bank of England and the Federal Reserve began their cycle of rate hikes. Considering that gold does not earn interest like interest for traders, it is seen as an anti-fiat instrument. Therefore, in a globally rising interest rate environment, it makes gold relatively less attractive.
Next week, from Jerome Powell to San Francisco branch president Mary Daly and St. Louis branch chairman James Bullard will feature a series of Fed speeches. Markets will look for clues from the speeches on the Fed’s thoughts on inflation and Ukraine. Let’s remind you that last week, bets on a 50 basis point rate hike at the Fed’s May meeting rose to nearly 50%.
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